50th Anniversary heralds a new era. for the PRC. Housing reform accelerates on. Banking reform supports the. residential property market

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1 50th Anniversary heralds a new era for the PRC Housing reform accelerates on all fronts Banking reform supports the residential property market Infrastructure development becomes a high priority Economic growth is maintained in the face of the financial crisis in the region China prepares to enter the World Trade Organisation ("WTO")

2 Property Portfolio by Region NWCL has a diversified portfolio in some 20 PRC Cities China: A Country of Great Opportunity The Company's property projects are concentrated in high-economic growth regions or regional transportation hubs such as Beijing,Tianjin, Shenyang, Shanghai,Wuhan and Guangzhou.The portfolio encompasses: Beijing 7 Conventional Property Projects with total GFA 1,009,221 sq. m. 4 Mass Residential Community Housing Projects with total GFA 2,068,766 sq. m. 1CityCore Redevelopment Project with site area 223,952 sq. m. Tianjin 2 Conventional Property Projects with total GFA 353,501 sq. m. 4 Mass Residential Community Housing Projects with total GFA 2,048,635 sq. m. Shenyang 2 Conventional Property Projects with total GFA 127,500 sq. m. 1 Mass Residential Community Housing Project with total GFA 2,861,900 sq. m. Dalian PROPERTY PORTFOLIO 37 Conventional Property Projects with a Shijiazhuang 1 Conventional Property Project with total GFA 89,615 sq. m. 1CityCore Redevelopment Project with site area 2,520,991 sq. m. 2 Conventional Property Projects with total GFA 356,457 sq. m. Beijing 13.6% Tianjin 10.6% total GFA of 4.1 million sq. m. Wuhan Shenyang 13.2% Shanghai 3.6% Wuhan 18.2% Guangzhou 18.1% Pearl River Delta 19.2% Other Regions 3.5% 29 Mass Residential Community Housing Projects with a total GFA of 18.5 million sq. m. 5 Conventional Property Projects with total GFA 475,215 sq. m. 2 Mass Residential Community Housing Projects with total GFA 3,628,785 sq. m. Nanjing 1 Conventional Property Project with total GFA 198,094 sq. m. Property Portfolio by Usage NWCL's main focus is on mass residential housing PROPERTY RELATED PROJECTS 2 City Core Redevelopment ("CCR") Projects with a total site area of 2.7 million sq. m. 1 Land Improvement Project with a total site area of 6.5 million sq. m. 1 Land Improvement Project with site area 6,502,088 sq. m. Guangzhou 4 Conventional Property Projects with total GFA 251,523 sq. m. Hefei 1 Mass Residential Community Housing Project with total GFA 108,468 sq. m. Shanghai 6 Conventional Property Projects with total GFA 528,791 sq. m. 2 Mass Residential Community Housing Projects with total GFA 287,381 sq. m. Residential 85.1% Commercial 10.8% Office 3.0% Hotel 1.1% 7 Mass Residential Community Housing Projects with total GFA 3,830,343 sq. m. Pearl River Delta 7 Conventional Property Projects with total GFA 758,280 sq. m. 8 Mass Residential Community Housing Projects with total GFA 3,583,352 sq. m.

3 Corporate Profile Listed on The Stock Exchange of Hong Kong Limited ("SEHK") in July of 1999, New World China Land Limited ("NWCL") is the China property arm of New World Development Company Limited ("NWD"). "Building for a Nation" is the theme used by NWCL to describe its mission to capture the opportunities arising from the Republic of China ("PRC"). NWCL is composed of a welldiversified property portfolio that is spread across some 20 PRC cities. As China enters the new millennium, NWCL is set to become a leading nationwide developer that delivers properties to meet the nation's increasing need of quality housing. rapidly emerging mass residential market in the People's Contents Chairman's Statement Business Review Shenyang Review Pearl River Delta Review Report of the Directors Project Profile Performance Highlights Corporate Structure Beijing Review Wuhan Review Financial Review Financial Statements Glossary of Terms Year in Review Community/ Employee Relations Tianjin Review Guangzhou Review NWCL in the Financial Market Financial Summary Corporate Information Directors' Profile China Property Market Overview Shanghai Review Other Regions Review Report of the Auditors Notice of AGM

4 Performance Highlights Financial Summary Proforma Combined Results Year ended Year ended 30 June June 1998 HK$ 000 HK$ 000 Turnover 506, ,068 Operating profit 464, ,405 Profit attributable to shareholders 171, ,948 Earnings per share - basic (HK cents) Total assets 20,300,440 18,142,605 Total debts 3,267,774 2,517,454 Shareholders funds 16,039,479 14,827,691 Debt to equity ratio 20.4% 17.0% Bank Borrowings Profile Outstanding Amount Original 30 June June 1998 Currency HK$ 000 Equivalent HK$ 000 Equivalent % Change RMB Subsidiaries 125,929 18, Joint ventures/associated companies 424,439 91, Sub-total 550, , HK$ Subsidiaries - - N/A Joint ventures/associated companies 397, , Sub-total 397, , US$ Subsidiaries 744, , Joint ventures/associated companies 288, ,000 (6.9) New World China Land Limited Sub-total 1,033,378 1,005, Grand Total 1,980,746 1,445,

5 Performance Highlights Land Bank Land bank increased by 4% during FY99 to 22.6 million sq. m. (Thousand sq. m.) 14,000 12,000 12,364 12,132 10,000 8,000 6,000 4,000 2, ,148 6,053 3,609 6,032 Conventional Property Community Housing Low-cost Community Housing FY99 FY98 Attributable Operating Profit ( AOP ) AOP decreased by 15% to HK$ million in FY99. (HK$'000) 300, , , , , ,849 Conventional Property 100,000 50, ,194 43,272 7,533 54,727 7,814 0 Community Housing Low-cost Community Housing Land Improvement FY99 FY98 AOP: Attributable Operating Profit, profit attributable to shareholders before head office items. Annual Report

6 Year in Review Hefei New World Garden Foundation Ceremony Listing on The Stock Exchange of Hong Kong New World China Land Limited 4 PROJECT ACQUISITION July 1998 Guangzhou Gloria City (224,596 sq. m.) February 1999 Zhaoqing Lake Development (315,006 sq. m.) March 1999 Pearl River New Town Zone L (285,075 sq. m.) June 1999 Tianjin Nanshi Development (1,549,842 sq. m.) PROJECT COMPLETION September 1998 Completion of Guangzhou New World Eastern Garden Phase I (21,720 sq. m.) Completion of Tianjin Xin Chun Hua Yuan Development Lot 603 (26,019 sq. m.) November 1998 Completion of Tianjin Huayuan Residential Area Development Sub area 8 (146,650 sq. m.) December 1998 Completion of Shanghai Zhongshan Square (76,498 sq. m.) June 1999 Completion of Dongguan New World Garden Phase VI (34,603 sq. m.) During the Year Completion of Wuhan Changqing Garden (71,477 sq. m.) PROJECTS LAUNCHED FOR SALE July 1998 Launching of Tianjin Huayuan Residential Area Development Sub area 8 (121,519 sq. m.) Launching of Wuhan Changqing Garden Phases II and III (224,002 sq. m.) September 1998 Launching of Dongguan New World Garden Phase VIII (34,092 sq. m.) January 1999 Launching of Xintang New World Garden (12,672 sq. m.) July 1999 Launching of Beijing New World Centre Phase II (25,377 sq. m.) September 1999 Launching of Hefei New World Garden (20,718 sq. m.)

7 Completion of Guangzhou New World Eastern Garden Phase I FINANCING August 1998 Signed RMB30 million loan agreement with Bank of Communications Tianjin Branch December 1998 Signed RMB150 million loan agreement with Bank of Communications Tianjin Branch Signed RMB210 million loan agreement with Industrial & Commercial Bank of China Beijing Branch January 1999 Signed RMB70 million loan agreement with Bank of China Tianjin Branch Signed RMB30 million loan agreement with China Construction Bank Nanjing Branch February 1999 Signed RMB16 million loan agreement with China Everbright Bank Shanghai Branch April 1999 Signed RMB100 million loan agreement with Industrial & Commercial Bank of China Wuhan Branch Zhuhai New World Harbour-front Garden Foundation Ceremony Global IPO Road Show May 1999 Signed RMB12 million loan agreement with China Everbright Bank Shanghai Branch Signed RMB20 million loan agreement with China Huaxia Bank Nanjing Branch June 1999 Signed RMB16 million loan agreement with China Everbright Bank Shanghai Branch Signed RMB82.7 million and RMB10 million loan agreements with China Huaxia Bank Beijing Branch and China Construction Bank Beijing Branch, respectively July 1999 Signed RMB16 million loan agreement with China Everbright Bank Shanghai Branch HIGHLIGHTS OF THE YEAR June 1999 Investor site visit to Wuhan and Guangzhou 23 June - 9 July 1999 Global IPO road show for New World China Land Limited 16 July 1999 Listing on The Stock Exchange of Hong Kong Year in Review Annual Report

8 Chairman's Statement As the People s Republic of China wraps up the celebration of its 50th Anniversary, the country is marching ahead with its reform plans to become a stronger economic power in the next millennium. The PRC leadership realises that raising the standard of living of its New World China Land Limited ( NWCL ) reported a net profit of HK$171 million for the year ended 30 June 1999, a 10% decrease over Earnings per share declined by 10% to HK$0.13. The results were in line with the forecast set out in the Initial Public Offering Document at the time of people is fundamental to a nation s economic and social success. It is upon this vision of improved living standards that the New World Group founded its China property arm New World China Land Limited. WHAT DOES BUILDING FOR A NATION MEAN? This vision of Building for a Nation stems from the Central Government s agenda to improve the standard of living of the Chinese people through housing reform. Above all, the government has designated New World China Land Limited the NWCL listing. A detailed analysis of the results can be found in the Financial Review section on page 48. the housing sector as an economic stimulus. New policies are being implemented to direct pools of savings into the residential market. In addition, interest rates have been on the downward trend for the last three years 6

9 Chairman's Statement and the availability of mortgages has housing reform on a daily basis. Company is targeting a broader market been greatly increased. The property business is becoming a segment while in other cities the focus pillar industry for the country. will be on the medium- to lower-end. Another driving factor for housing By focusing on the mass residential reform is urbanisation. According to the market, the Company can capture the Since the Company first entered the Ministry of Construction, the urban opportunities from a rising level of market, it has noticed a better legal population will rise to over 400 million in homeownership. structure for property development By 2010, the population of the The improved structure increased the PRC s cities will increase to 630 million, a MARKET FUNDAMENTALS Company s confidence in continuing its rise of 58% over the decade. To maintain AND BUSINESS ENVIRONMENT business activities and, at the same social stability, central and local time, bolstered the confidence of authorities are committed to improving There is a perception of oversupply in individual homebuyers. living conditions in the major cities. the PRC property market. However, this is only the case for the higher-end of A LARGE AND DIVERSIFIED Under housing reform, the State will put the market in certain major cities. Right LAND BANK an end to the provision of welfare from the start, NWCL was designed to housing for State-Owned Enterprises focus on the mass residential market. NWCL s property portfolio consists of 66 ( SOEs ) and government employees. In People are demanding better built projects, encompassing a potential the past, substantial amounts of capital houses and more facilities. The gross floor area of 22.6 million sq. m., were tied up in this scheme. With two- Company firmly believes that quality and is over 80% targeted at the mass thirds of the population living in properties that are priced right will residential market. NWCL tends to welfare houses, the reduction of this receive favourable responses. focus on developing large-scale burden will have a far-reaching impact community housing projects which on the country. When deciding what types of projects allow the Company to achieve to build, NWCL considers a region s economies of scale and the potential With over a decade of investment history in the PRC property market, NWCL has witnessed the impact of level of affordability. Among the major cities of Beijing, Shanghai, Guangzhou and cities in Southern China, the of a gradual price increase in phases. Annual Report

10 NWCL s land bank is spread across the country in over 20 cities. By having a diversified base the Company is able to mitigate risks and capture the potential of a booming market in more regions. NWCL has achieved successes in certain cities where projects are more mature. With more projects ready to begin construction this year, the overall production level is rising. FINANCING FUTURE GROWTH for various projects at the corporate and joint venture levels, representing 28% of its total debt. MANAGEMENT DEPTH Given the geographic spread of the Company s investments, the formation of a proper management team to execute its plans is crucial. For that reason, in each key region a Chief Executive is appointed from Hong Kong to manage the daily activities together with staff seconded from Hong Company is rising to meet the challenge and eager to realise its vision of Building for a Nation. At this time, I would like to extend my sincere thanks to all those who have worked so hard to make this company a reality. NWCL will become a major developer in the vibrant and exciting China property market. Dr. Cheng Kar-shun, Henry Chairman and Managing Director Given the backdrop of a low interest rate Kong and local employees. An Hong Kong, 15 October 1999 New World China Land Limited 8 environment and the liberalisation of the mortgage and housing loan market, the Company is in a favourable position to finance its growth in the local market. Its gearing currently stands at 20% and the objective is to increase debt in Renminbi terms. By financing local operations with local currency, mismatches can be avoided and business risk reduced. As at 30 June 1999, NWCL has arranged a total of RMB589 million in local currency loans Operation Committee is based at the corporate office in Hong Kong to supervise regional offices and provide support when needed. This structure provides the flexibility needed by local operations and allows the Hong Kong corporate office to monitor activities on a regular basis. All the pieces are coming into place as the China property market prepares for an unprecedented era of growth. The

11 Directors' Profile Dr. Cheng Kar-shun, Henry Doo Wai-hoi, William CHAIRMAN AND MANAGING DIRECTOR Dr. Cheng Kar-shun, Henry (aged 52). Dr. Cheng became the Chairman and Managing Director of New World China Land Limited in He is also the Managing Director of New World Development Company Limited, the Chairman of New World Infrastructure Limited, New World CyberBase Limited, New World Services Limited, New World Telephone Holdings Limited, New World First Bus Services Limited and Tai Fook Securities Group Limited. He is the Managing Director of NWD (Hotels Investments) Limited and a Director of Chow Tai Fook Enterprises Limited, Marriott International Inc., HKR International Limited and Kwoon Chung Bus Holdings Limited. Dr. Cheng is the Chairman of the Advisory Council for The Better Hong Kong Foundation, a Committee Member of the Eighth and Ninth Chinese People s Political Consultative Committee of the People s Republic of China and a Member of the Hong Kong SAR Services Promotion Strategy Group. Dr. Cheng is the brother of Mr. Cheng Kar-shing, Peter and the brother-in-law of Mr. Doo Waihoi, William. VICE-CHAIRMAN Doo Wai-hoi, William (aged 55). Mr. Doo was appointed Vice-Chairman of New World China Land Limited in Cheng Kar-shing, Peter Leung Chi-kin, Stewart June Mr. Doo s corporate positions include Vice Chairmanships of New World Infrastructure Limited, New World CyberBase Limited and Tai Fook Securities Group Limited, Managing Director of Fung Seng Diamond Company Limited as well as the Directorships of NWD (Hotels Investments) Limited and CTF Hotels Holdings, Inc. Mr. Doo is a Governor of the Canadian Chamber of Commerce in Hong Kong and a Member of the current Shanghai Committee of Chinese People s Political Consultative Conference. Mr. Doo is the brother-in-law of Dr. Cheng Kar-shun, Henry and Mr. Cheng Kar-shing, Peter. EXECUTIVE DIRECTORS Cheng Kar-shing, Peter (aged 47). Mr. Cheng was appointed Executive Director of New World China Land Limited in June He is a Director of New World Development Company Limited, New World Infrastructure Limited, NWD (Hotels Investments) Limited, Macao Water Supply Company Limited and Polytown Company Limited. Mr. Cheng is the brother of Dr. Cheng Kar-shun, Henry and the brother-in-law of Mr. Doo Wai-hoi, William. Leung Chi-kin, Stewart (aged 60). Mr. Leung was appointed Executive Director of New World China Land Limited in June He is the Director and Group General Manager of New World Development Company Limited, a Directors' Profile Annual Report

12 Chan Kam-ling Chan Wing-tak, Douglas So Ngok Chow Kwai-cheung Chow Yu-chun, Alexander New World China Land Limited Director of New World Infrastructure Limited, New World Hotel Company Limited, New World First Bus Services Limited, Hip Hing Construction Company Limited, Asia Television Limited and Young s Engineering Company Limited and the Deputy Chairman of Huey Tai International Limited. Chan Kam-ling (aged 59). Mr. Chan was appointed Executive Director of New World China Land Limited in June He is a Director of New World Development Company Limited and New World Infrastructure Limited. Mr. Chan is currently the Managing Director of Hip Hing Construction Company Limited, New World Services Limited, Sino-French Holdings (Hong Kong) Limited and Macao Water Supply Company Limited as well as the Director of Companhia de Electricidade de Macau - CEM, S.A.R.L.. Chow Kwai-cheung (aged 57). Mr. Chow was appointed an Executive Director of New World China Land Limited in June He is currently a Director of New World Development Company Limited and Hip Hing Construction Company Limited. He has over 30 years experience in property development and investment businesses. Mr. Chow joined the New World Group in 1974 and is responsible for the construction and engineering operations of the Company and the New World Group. Chan Wing-tak, Douglas (aged 50). Mr. Chan was appointed Executive Director of New World China Land Limited in He is the Chairman of Pacific Ports Company Limited, the Managing Director of New World Infrastructure Limited and a Director of New World CyberBase Limited, china.com Corporation and Macao Water Supply Company Limited. Mr. Chan is a Member of the Third Hainan Province Committee of Chinese People s Political Consultative Conference. Chow Yu-chun, Alexander (aged 52). Mr. Chow was appointed an Executive Director of New World China Land Limited in June He is a fellow of the Chartered Association of Certified Accountants (UK) and an associate of the Hong Kong Society of Accountants and has over 25 years of experience in property development and investment in Hong Kong. Mr. Chow joined the New World Group in 1973 and is responsible for the financial operations of the Company and the New World Group. Mr. Chow is the Company Secretary of New World China Land Limited. So Ngok (aged 52). Mr. So was appointed an Executive Director of New World China Land Limited in June Mr. So is an Executive Director of New World Infrastructure Limited and Pacific Ports Company Limited and a Director of a number of companies with investments in China. 10

13 Directors' Profile Fu Sze-shing Cheng Wai-chee, Christopher Lo Hong-sui GBS Tien Pei-chun, James NON-EXECUTIVE DIRECTORS Fu Sze-shing (aged 50). Mr. Fu is a Non-Executive Director of New World Infrastructure Limited and a Director of New World Development (China) Limited and a number of companies with investments in China. He has over 20 years' experience in PRC property development and investment businesses. Lo Hong-sui GBS (aged 51). Mr. Lo is the Chairman of Shui On Construction and Materials Limited and the Chairman of Shui On Group. He is the founding Chairman and current President of the Business and Professionals Federation of Hong Kong, a Member of The Ninth National Committee of Chinese People s Political Consultative Conference, the President of Shanghai-Hong Kong Council for the Promotion and Development of Yangtze, and Adviser of Chinese Society of Macroeconomics, a Member of Hong Kong/United States Economic Co-operation Committee, a Council Member of the China Overseas Friendship Association, the Chairman of the Council of the Hong Kong University of Science and Technology and a Director of Great Eagle Holdings Limited. Mr. Lo was awarded the Gold Bauhinia Star. Cheng Wai-chee, Christopher (aged 51). Mr. Cheng is the Chairman of USI Holdings Limited and a director of Sealed Air Corporation listed on the New York Stock Exchange and Gieves Group plc listed on the London Stock Exchange. Mr. Cheng plays an active role in the public services. He had twice served on the Hong Kong Trade Development Council for a total period of 14 years and was Chairman of its Staff and Finance Committee. He presently serves on the following public organisations : Public Service Commission, The Town Planning Board, Court of The Hong Kong University of Science and Technology and Council of the University of Hong Kong. He is the Deputy Chairman of the Hong Kong General Chamber of Commerce. Mr. Cheng holds an MBA degree from the Columbia University. Tien Pei-chun, James (aged 52). Mr. Tien is the Chairman of Manhattan Holdings Ltd., Manhattan Garments (International) Ltd., Manhattan Realty Ltd. and Manhattan China Investment Ltd. and a Director of a number of private companies. A Legislative Councillor since 1988, Mr. Tien is very active in the community and serves on government bodies and committees as well as nongovernment boards and committees in Hong Kong. He serves on the Legislative Council s Trade and Industry Panel, Manpower Panel, Financial Affairs Panel and Economic Services Panel of which he is the Chairperson. He is Chairman of the Liberal Party, Member of The Chinese People s Political Consultative Conference, General Committee Member of the Hong Kong General Chamber of Commerce and the Federation of Hong Kong Industries, Council Member of the Hong Kong Polytechnic University and a Council Member of The Chinese University of Hong Kong. Annual Report

14 Corporate Structure Chairman & Managing Director Board of Directors Audit Committee Lo Hong-sui, Vincent Cheng Wai-chee, Christopher Tien Pei-chun, James Operation Committee Cheng Kar-shing, Peter (Executive Director) Chan Wing-tak, Douglas (Executive Director) Chow Yu-chun, Alexander (Executive Director) Leung Wai-kai, William (Assistant to Managing Director) Fan Chor-kwok, Ambrose (Assistant General Manager) Kong To-yeung, Frankie (Assistant General Manager) Cheng Ming-kit, Tommy (Assistant General Manager) Ngan Man-ying, Lynda (Financial Controller) New World China Land Limited Key Regional Offices Chief Executives Beijing Tianjin Shenyang Shanghai Wuhan Au Wai-chuen, Cheong Chak-lon, Lau Chung-chun, Chau Lam-cheung, Au Wai-chuen, Albert Allan Desmond Benjamin Albert Guangzhou Geng Shusen, Kenneth 12

15 Community/Employee Relations Community/Employee Relations "Project of Hope" at Shenyang COMMUNITY RELATIONS NWCL keeps in close touch with the daily lives of the people of the PRC and this is an important component of its mission in Building for a Nation. The Company takes every opportunity to contribute to the communities in which it operates. schools and community activity centres as part of its design of self-contained community housing developments. These facilities benefit the thousands of people residing in the Company s premises and have improved their quality of life. The Company s regional offices are also key patrons of local social Throughout its investment history in the PRC, the and charity programmes. Company has helped build kindergartens, primary EMPLOYEE RELATIONS The Company had 619 people under its employment as at 30 June 1999 in Hong Kong and the PRC. The Company values the talent of its staff as much as it appreciates the opportunities arising from its business. For that reason, the Company is constantly providing training programmes for staff members at all levels. The Company believes that job satisfaction and proper compensation are the key motivating factors. Periodic performance reviews are conducted at the Hong Kong head office as well as the local joint venture companies. In addition, an extra effort is made to maintain open communication channels and promote a friendly working environment. Annual Report

16 Business Review New World China Land Limited 14

17 Business Review In 1980, the New World Group spearheaded its first investment in the PRC by participating as a partner in the first Sino-foreign hotel joint venture the China Hotel in Guangzhou. Through its two decades of investments, the New World Group has accumulated substantial experience and an in-depth knowledge of the PRC. Currently, the New World Group has invested over US$4 billion in the PRC property, hotel, infrastructure and telecommunications sectors. New World Group pursues an investment path that is closely connected with the priorities and aspirations of municipal, provincial and state governments. By The Company s property projects are concentrated in high economic growth regions or regional transportation hubs such as Beijing, Tianjin, Shenyang, Shanghai, Wuhan and Guangzhou. understanding the policies and economic needs on a nationwide basis, the New World Group is able to position its business interests to benefit from priority projects and markets. COMPREHENSIVE CO-OPERATION AGREEMENTS By entering into Comprehensive Cooperation Agreements ( CCAs ) with local governments the various divisions of New World Group can work together to offer an overall investment plan to the underlying regions. In return, these CCAs allow the New World Group to foster strong working relationships with local governments in order to expedite the approval process and to obtain various investment incentives for its projects. The first CCA was signed with the City of Wuhan in 1993 and has led to the development of NWCL s first Low-cost Community Housing Project. Subsequent CCAs were signed with 15 cities and provinces, including, Guangzhou, Tianjin, Sichuan, Jiangxi and Zhuhai. Annual Report

18 Business Review: China Property Market Overview Prior to presenting the business details of the Company s property portfolio, it is important to understand the macro environment which affects the underlying performance of the Company and its future prospects. When considering the evolution of the PRC property market, two factors enter the spotlight housing reform and the restructuring of the banking industry. HOUSING REFORM To implement its housing reform policy the Central Government has come up with a multi-faceted program that deals with a variety of issues over both the short- and longterm time frame. Key points of the housing reform are as follows: * Gradually commercialise and socialise housing units to build a new housing structure that suits the conditions of the PRC * Expedite the construction of residential housing to spur further economic growth and satisfy the increasing demand for housing * Stop the allocation of welfare housing and establish a residential housing supply mechanism based on the provision of affordable housing * Develop the property finance market * Develop a regulatory framework for property trading in the PRC * Land policy reform New World China Land Limited * Develop property-related services 16

19 Business Review: China Property Market Overview (RMB 100 million) 600 PRC Investment Made in Real Estate Development in 1998 (RMB) 30,000 Where to Invest? Source: * China Statistical Yearbook 1999 * 99 Beijing Statistical Yearbook * 99 Statistical Yearbook of Tianjin ,000 * Shenyang Yearbook ,000 * 99 Statistical Yearbook Beijing Shanghai Guangzhou Tianjin Wuhan Shenyang Shenzhen Guangdong 15,000 10,000 5,000 0 National Beijing Shanghai Guangzhou Tianjin Wuhan Shenyang Shenzhen Guangdong of Shanghai * 99 Statistical Yearbook of Wuhan * 99 Statistical Yearbook of Guangzhou * Statistical and Information Per capita annual disposable income of urban residents in 1998 Yearbook of Shenzhen 1999 * Guangdong Statistical Per capita saving deposits of urban and rural residents in 1998 Yearbook 1998 NWCL Development Schedule Increasing production on low to medium end development in the coming few years NWCL Residential Portfolio With nearly 87% of its residential GFA focused on low-to-medium end developments, NWCL is to benefit from housing reform in the PRC (GFA in thousand sq. m.) 1,800 1,600 1,400 1,200 1, FY99 FY00 FY01 FY02 Conventional Property Conventional Property 13% Community Housing Low-cost Community Housing Community Housing 55% Low-cost Community Housing 32% Annual Report

20 Market Share of National Personal Housing Mortgage Market in 1997 Total: RMB billion Structural Reform Municipal governments are in the process of setting up special administrative bodies to determine the amount of housing to be commercialised. Rents paid by SOEs and state employees were increased many times to match the market rate. The government believes that rent increases create an incentive for the general population to look closely at home ownership. Instead of allocating funds to construct welfare housing, direct subsidies are given to purchase homes in the form of low interest loans. China Construction bank 49% Industrial & Commercial Bank 34% of China Bank of China 10% Agricultural Bank of China 7% Source: ICBC As a result, government institutions or SOEs are relieved from sparing resources on welfare housing. Low and Medium Income Focus The PRC Government s priority is to promote the development of housing for the lowand medium-end markets. In terms of promoting such market segments, the state plans to adjust the investment structure and provide support by introducing better planning, lower taxes, efficient resettlement policies and more financing alternatives. Housing Provident Fund In addition to banking reforms, the government is meeting the mortgage challenge by offering direct subsidies in combination with Housing Provident Fund ( HPF ) loans. The HPF will be used to subsidise home purchases by offering mortgage loans with lower interest rates than those offered by commercial banks. The HPF will encourage and assist employees to purchase homes. In turn, contributions to the HPF from New World China Land Limited enterprises, employees and the state will grow gradually. Secondary Market Reforms In another measure the government is liberalising the regulations governing the secondary market. By allowing property to change hands more freely and by 18

21 Business Review: China Property Market Overview permitting banks to extend mortgage loans in support of secondary market sales, the government hopes to pump more liquidity into the market. Market Share of National Personal Housing Mortgage Market in 1998 Total: RMB billion In addition, welfare housing units purchased at cost or priced at a marginal profit can be sold in the secondary market. Welfare housing units bought at standard prices can be sold in the secondary market after paying an adjustment fee. Land Supply and Idle Land The government continues to tighten the control on land supply. Over the last decade the government was criticised for poor land allocation policies and flooding the market with an oversupply of land. Administrative shortfalls will hopefully be rectified by the upcoming introduction of related land administration regulations. For instance, approval of land above the size of 2,000 mous (approximately China Construction bank 50% Industrial & Commercial Bank 32% of China Bank of China 10% Agricultural Bank of China 8% Source: ICBC 1,334,000 sq. m.) must be attained from provincial or central government rather than from city and/or county authorities. If land lies dormant for a period of time it will be taken back and fines may be levied. Land Auctions Another important element in the government s land management strategy is the introduction of market mechanisms to better determine land values. Auctions have been arranged in the southern cities of Shenzhen and Guangzhou and the practice will likely be extended to other cities soon. REFORMS IN THE BANKING INDUSTRY A similar government initiative is designed to liberalise the banking sector to improve liquidity and allow for greater competition in the mortgage and home finance areas. Annual Report

22 Mortgage Rates for Individual Mortgage Loan Mortgage loan terms is extended from 10 years to a maximum of 20 years More Mortgage Lenders in More Cities To finance housing reform the government has implemented a wide scale restructuring of the banking and mortgage lending system. Over the last year, state banks have relaxed mortgage lending limits and more banks are permitted to provide mortgage (%) services. The scope of mortgage loan operations has been increased to over 220 cities from a mere handful Year 2-3 Years 4-5 Years 6-10 Years Source: People's Bank of China Years More Funds Available and Better Terms The current trend illustrates the government s desire to stimulate the mortgage loan market to bring more liquidity to the housing market. According to the People's Bank of China's statistics, total housing mortgages reached RMB49 billion for the first time in 1998, up from a mere RMB19 billion in The mortgage loan market is expected to rise once again in With commercial banks allowed to allocate 15% of lending portfolios to housing construction and consumption loans, the long-term forecast for growth is promising. The central bank has also boosted the proportion of bank capital to be allocated to mortgage loans, raised the maturity ceiling to 20 years (from ten years) and allowed banks to increase the loan principal to 70% (from 50%) of a property s value. Financing Developers and Projects With the introduction of new housing loan parameters, developers are in a position to benefit from relaxed lending criteria. In terms of housing projects, as long as a New World China Land Limited developer possesses 30% of the capital, and the property is targeted at a viable market, a commercial bank can grant a construction loan. These funding alternatives will significantly improve the return on capital for developers. 20

23 Business Review: China Property Market Overview THE FUTURE OF THE PROPERTY MARKET While perfectly smooth implementation of all aspects of the housing reform cannot be expected given the size and complexity of the PRC property market, the current direction of the initiative illustrates the government s clear resolve to improve the development of this pillar industry as well as the living conditions of the Chinese population. As the resolve of the Central Government filters down through the system to the local municipalities, real progress will be achieved and the residential housing market will be positioned for healthier growth in the future. The restructuring of the banking system will be as challenging, if not more so, as the reform of the housing sector. Saddled with the vestiges of the age-old SOE system and built to support state policies, the banks must restructure balance sheets to deal with massive loan losses and alter the cultural aspects of how they do business. Currently, there are signs that banking system reform is progressing, and it is expected that the process will accelerate in the coming period. Annual Report

24 Business Review: Beijing New World China Land Limited BEIJING AND CHONGWEN DISTRICT MAP 22

25 Business Review: Beijing City Statistics % Change Population (million) Per capita GDP (RMB) 18,423 10, GDP growth (%) (28.1) Per capita annual disposable income of urban residents (RMB) 8,472 5, Per capita saving deposits of urban and rural residents (RMB) 20,954 8, Per capita living space (sq. m.) Source: 99 Beijing Statistical Yearbook Beijing Residential Sales (10,000 sq. m.) (RMB 100 million) Beijing is the political and cultural centre of the PRC as well as one of the country s most densely populated cities. The capital city has a population of over 12 million, increasing at a rate of 11% per annum over the last four years. As the nation's capital, Beijing is an attractive place for domestic and foreign organisations to set up branches and representative offices. Beijing 's GDP is among the country's highest, reaching RMB201 billion in The city's GDP has increased by 86% since The total GFA for Beijing residential properties sold at the end of 1998 was 37.7 million sq. m. which compares to 25.6 million sq. m. at the end of Average per capita living space of urban residents rose to sq. m. from 9.49 sq. m. over the period. The Company has 11 property projects in Beijing with a prime focus in the Chongwen District one of the four central districts within the city core. Due to the higher income of the Beijing populace and a critical mass of foreign investment, the Company has developed a spectrum of projects catering to the needs of different market segments. These properties range from multi-use residential/office retail complexes (Beijing New World Centre Phases I and II) to medium- to low-end Mass Residential Community Housing Projects (Beijing New World Garden and Yizhuang Development). Floor space of residential buildings actually sold in real estate development Residential buildings purchased by individuals in real estate development Source: 99 Beijing Statistical Yearbook Annual Report

26 Beijing New World Garden Beijing Portfolio by Type (GFA) Beijing New World Centre Phase II Total 3,078 thousand sq. m. Over the next three fiscal years, the following projects will be completed: Conventional Property 33% Community Housing 67% Beijing Conventional Property Total 1,009 thousand sq. m. GFA Attributable Usage (sq. m.) Interest (%) FY00 Beijing New World Centre Phase II R,O,C 129, Total FY00 129,559 FY01 Beijing Lai Loi Garden Phase I R 63, Beijing New World Garden R,C 39, Beijing Chongwen District Lot R 65, No.5 Development Phase I Chongwen District Development R 18, Beijing Yizhuang Development R,C 90, Total FY01 275,557 Residential 72% Commercial 18% Office 8% Hotel 2% FY02 Beijing Lai Loi Garden Phase II R 63, Beijing New World Garden R,C 56, Beijing Yizhuang Development R,C 89, Total FY02 208,375 R: Residential O: Office C: Commercial Beijing Community Housing Total 2,069 thousand sq. m. Progress on Key Projects project as well as a landmark at the New World China Land Limited Residential 69% BEIJING NEW WORLD CENTRE PHASE I Beijing New World Centre Phase I stands as the Company s flagship centre of the nation s capital. Since the opening of Phase I in June 1998 and the completion of the widening work on the Chongwenmenwai Street, the northern Chongwen District has experienced a rise in consumer traffic. 24 Commercial 31%

27 Business Review: Beijing Beijing New World Centre Phase I New World Courtyard, Beijing Beijing New World Centre Phase I Most of the service apartments built in Phase I have been pre-sold between 1996 and Despite a soft office market due to increased supply, the Company has been able to sell over 12,395 sq. m. of offices space as at 30 June The remaining 27,542 sq. m. of office space has been held for investment purposes and an occupancy rate of over 70% was achieved by the end of the year. Since its opening in June 1998, the 74,232 sq. m. shopping arcade has quickly become the most visited shopping area in the Chongwen District and has achieved a promising occupancy rate. NEW WORLD COURTYARD, BEIJING Since its opening in July 1998, the New World Courtyard, Beijing has steadily increased its market share in the fourstar hotel market in Beijing. An average occupancy rate of over 70% has been achieved during the year and further improvement is expected in the coming year. BEIJING NEW WORLD CENTRE PHASE II Adjacent to Phase I, Beijing New World Centre Phase II provides additional shopping and residential space to the Company s portfolio in the Chongwen District. The project will be completed in mid-2000 with a shopping arcade of 38,730 sq. m. and service apartment of 82,211 sq. m. hovering over an ice skating rink. Presale began in July 1999 and the market responded favourably. BEIJING NEW WORLD GARDEN With the completion of the Beijing New World Centre Phases I and II, the Company's focus is now on the development of mass residential projects targeting primarily the local population. The first of such developments, Beijing New World Garden, will be launched in late 2000 and will offer 95,489 sq. m. of mediumend residential properties. Future residents of this comprehensive development can enjoy the prestige and privilege of nearby shopping malls and other facilities in Beijing New World Centre Phases I and II. BEIJING CHONGWEN DISTRICT LOT NO. 5 Beijing Chongwen District Lot No. 5 is located on the eastern side of Chongwenmenwai Street, and is opposite to the Beijing New World Centre Phases I and II. An initial phase of 65,271 sq. m. of residential and office space is being developed that targets the local market. Annual Report

28 Business Review: Tianjin New World China Land Limited TIANJIN AND HONGQIAO, NANKAI, HEPING DISTRICT MAP 26

29 Business Review: Tianjin Tianjin is one of the four self-governed municipalities and is an important northern sea port with a population approaching ten million. Tianjin s GDP rose to RMB134 billion in 1998, up 71% over This solid economic expansion improves the purchasing power of Tianjin residents and that trend is reflected in the growth of residential property sales. The total GFA for Tianjin residential properties sold in 1998 reached 23.3 million sq. m., up from 19.6 million sq. m. in Average per capita living space of urban residents increased to 8.06 sq. m. from 7.94 sq. m. over the same period. The Company now has six projects in Tianjin. The Company has obtained substantial amounts of land within the prime areas of Tianjin through its City Core Redevelopment scheme. This land is to be developed primarily as mass residential community housing. Progress On Key Projects TIANJIN NEW WORLD ANDERSON CENTRE AND XIN AN GARDEN Tianjin New World Anderson Centre is located in Nankai District, one of the major urban districts of the Tianjin urban centre. The development comprises a six-storey shopping mall, a ten-storey office tower with a fourstorey carpark above a commercial basement level. The Company intends to hold the project as part of its investment property portfolio. An occupancy rate of over 90% has been achieved for both the office and the retail portion. (RMB 100 million) Tianjin Residential Sales (10,000 sq. m.) Total sales of residential buildings in real estate development Floor space of residential buildings actually sold in real estate development Source: 99 Statistical Yearbook of Tianjin 0 Annual Report

30 Xin Chun Hua Yuan Development - Lot Bajiefang Tianjin Xin An Garden Tianjin Portfolio by Type (GFA) Total 2,402 thousand sq. m. Tianjin Conventional Property Total 354 thousand sq. m. Adjacent to Tianjin New World Anderson Centre is the Xin An Garden. It is a mass residential development with approximately 60,000 sq. m. of residential space. First phase of the project has been completed and sales progress has been very satisfactory. Conventional Property 15% Community Housing 60% Low-cost Community Housing 25% Residential 8% Commercial 31% Office 61% XIN CHUN HUA YUAN DEVELOPMENT - LOT 603 & LOT BAJIEFANG Lot 603 of the Xin Chun Hua Yuan Tianjin Community Housing Total 1,438 thousand sq. m. Tianjin Low-cost Community Housing Total 610 thousand sq. m. Development was launched for sale in FY98 and received favourable response from the market. Continuing into FY99 the development of another phase on Lot Bajiefang has just been started and will be launched to the market in FY00. The project targets the medium-end of the housing market and offers comprehensive facilities such Residential 65% Residential 96% as a club house, a post office, primary and New World China Land Limited Commercial 33% Office 2% Commercial 4% secondary schools. The project is located at a main junction between Hongqiao District and Nankai District with a subway station within short walking distance. 28

31 Business Review: Tianjin Tianjin New World Anderson Centre Tianjin Xin Chun Hua Yuan Development - Lot 603 Tianjin Dahutung Development NANSHI DEVELOPMENT Nanshi Development is one example of the Company s City Core Redevelopment that has been turned into a comprehensive property development. The Company s current focus is the development of Phase I of Lot 107 and 108 which has a residential GFA of 33,000 sq. m. and commercial GFA of 2,000 sq. m. The total GFA of Lot 107 and 108 is 259,525 sq. m. and the project will be developed by phases. TIANJIN DAHUTUNG DEVELOPMENT This project is located in one of the busiest commercial area of Tianjin on the bank of the Hai River. The development will be completed in FY00 and the initial phase will include a 12,000 sq. m. shopping mall. The Company received a very favourable response during the leasing process and an occupancy rate of 80% has been recorded. City Statistics % Change Population (million) Per capita GDP (RMB) 14,800 8, GDP growth (%) (35.0) Per capita annual disposable income of urban residents (RMB) 7,111 3, Per capita saving deposits of urban and rural residents (RMB) 11,271 4, Per capita living space (sq. m.) Not available 7.1 N/A Source: 99 Statistical Yearbook of Tianjin Over the next three fiscal years, the following projects will be completed: GFA Attributable Usage (sq. m.) Interest (%) FY00 Tianjin Dahutung Development C 12, Huayuan Residential Area Development Sub Area 4 R 123,502 Note 1 Huayuan Residential Area Development Sub Area 8 R 14,350 Note 1 Tianjin Xin Chun Hua Yuan Development C 16,000 Note 1 Total FY00 165,852 FY01 Tianjin Nanshi Development R 10,000 Note 2 Tianjin Xin Chun Hua Yuan Development R,C 18,000 Note 1 Tianjin Xin An Garden R,O,C 100, Total FY01 128,718 FY02 Tianjin Nanshi Development R 25,000 Note 2 Tianjin Xin Chun Hua Yuan Development R,C 20,000 Note 1 Total FY02 45,000 R: Residential O: Office C: Commercial Notes: 1. The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of the development of low-cost community housing. 2. This project is undertaken by two joint ventures. For one of the joint ventures, the Group's attributable interest is 70%; for the other one, the Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of the development of low-cost community housing. Annual Report

32 Business Review: Shenyang SHENYANG AND HEPING DISTRICT MAP New World China Land Limited 30

33 Business Review: Shenyang Site of the future Shenyang New World Garden Shenyang is the provincial capital of Liaoning Province, and has a population of over 6 million. Shenyang has historically been a heavy industrial and agricultural base as well as the transportation and trading hub of the Three Provinces in the Northeast. Close proximity to Korea and Japan has stimulated foreign investment flows over the past decade, thus creating a healthy economic growth. The Company has three projects in Shenyang with a total GFA of close to 3 million sq. m. The portfolio in Shenyang comprises a good mix of commercial and residential development with a prime focus on the mass residential market. City Statistics % Change Population (million) Per capita GDP (RMB) 12,658 6, GDP growth (%) (29.1) Per capita annual disposable income of urban residents (RMB) 4,714 2, Per capita saving deposits of urban and rural residents (RMB) 10,227 3, Per capita living space (sq. m.) Source: Shenyang Yearbook 1998 Over the next three fiscal years, the following projects will be completed: GFA Attributable Usage (sq. m.) Interest (%) FY01 Shenyang New World Garden R,C 110, FY02 Shenyang New World Garden R,C 150, R: Residential C: Commercial Annual Report

34 Signing Ceremony for Shenyang New World Garden Shenyang Portfolio by Type (GFA) Total 2,989 thousand sq. m. Shenyang Conventional Property Total 127 thousand sq. m. Progress On Key Projects SHENYANG NEW WORLD GARDEN Conventional Property 4% Community Housing 96% Residential 18% Commercial 27% Office 30% Hotel 25% Shenyang Community Housing Total 2,862 thousand sq. m. Shenyang New World Garden is located on the border of the Heping District in the southern part of the city. This area is designated as the future city centre for Shenyang and for that reason the Company has placed a strong emphasis on its 3 million sq. m. mass housing development. The project is a priority project to both the city of Shenyang and the Liaoning Province. Construction of Phase I of the project commenced in September Some 110,000 sq. m. and 150,600 sq. m. are expected to be completed in FY01 and FY02 respectively. New World China Land Limited Residential 78% Commercial 22% 32

35 Business Review: Shanghai Business Review: Shanghai SHANGHAI MAP Annual Report

36 Shanghai Hong Kong New World Tower Shanghai Changning Ramada Square Shanghai Residential Sales City Statistics (RMB 100 million) (10,000 sq. m.) 1,200 1, % Change Population (million) Per capita GDP (RMB) 28,200 15, GDP growth (%) (30.1) Per capita annual disposable income of urban residents (RMB) 8,773 5, Per capita saving deposits of urban and rural residents (RMB) 18,161 7, Per capita living space (sq. m.) Source: 99 Statistical Yearbook of Shanghai Total sales of residential buildings in real estate development Floor space of residential building actually sold in real estate development Floor Space of Buildings Under Construction in Real Estate Development Over the next three fiscal years, the following projects will be completed: GFA Attributable Usage (sq. m.) Interest (%) FY00 Shanghai Zhongshannanyi Road Development R,C,O 42, Total FY00 42,147 FY01 Shanghai Hong Kong New World Tower C 20, Shanghai Changning Ramada Square R,H,C 88, Total FY01 108,813 New World China Land Limited (1,000 sq. m.) 7,000 6,000 5,000 4,000 3,000 2,000 1, Source: 99 Statistical Yearbook of Shanghai FY02 Shanghai Hong Kong New World Tower R,O,H 94, Total FY02 94,047 R: Residential O: Office C: Commercial H: Hotel Few Asian cities can match Shanghai s promise as an economic dynamo and financial centre. Located at the middle of the PRC s eastern coast, Shanghai has a population of over 13 million. In 1998, Shanghai s GDP reached RMB369 billion, up 87% over The total GFA for Shanghai residential properties sold in 1998 surpassed 10.6 million sq. m., well above the 1997 total of 6.2 million sq. m. Average per capita living space of urban residents increased to 9.7 sq. m. from 9.3 sq. m. over the same period. 34

37 Business Review: Shanghai Shanghai Zhongshannanyi Road Deveopment Shanghai Portfolio by Type (GFA) Total 816 thousand sq. m. Progress on Key Projects CHANGNING RAMADA SQUARE HONG KONG NEW WORLD TOWER Hong Kong New World Tower is built on an island lot located at Huaihaizhong Road at the centre of Shanghai s prime business and shopping district. This project is situated among other wellknown commercial buildings and shopping centres and is connected to the subway exit of the Huaihaizhong Road Station on the basement level. Hong Kong New World Tower will comprise a 58-storey tower of hotel, office, service apartment as well as a fourlevel commercial podium and a threelevel parking/commercial basement. Completion of the 114,047 sq. m. initial phase is expected in FY01 and FY02. Situated on the southwest corner of Yuyuan Road and Ding Xi Road, the Changning Ramada Square is located at a prime location in the Changning District next to the subway exit of Zhong Shan Park Station. The property is situated across the street from the famous Zhong Shan Park and is only 20- minute drive from Hongqiao International Airport. Changning Ramada Square comprises two 24-storey towers with 17,272 sq. m. of commercial space, 33,987 sq. m. of residential units, and a 482-room hotel as well as a six-level commercial/parking podium and a three-level basement. The Company expects to launch the project in FY00 for lease. Conventional Property 65% Community Housing 35% Shanghai Conventional Property Total 529 thousand sq. m. Residential 45% Commercial 12% Office 28% Hotel 15% Shanghai Community Housing Total 287 thousand sq. m. Residential 90% Commercial 10% Annual Report

38 Business Review: Wuhan WUHAN AND WUHAN CHANGQING GARDEN AREA MAP New World China Land Limited 36

39 Business Review: Wuhan Wuhan Changqing Garden Wuhan is the transportation, trading and commercial hub of central China. The city s population of over 7.5 million people has been growing at 4.6% per annum over the last five years. The GDP of Wuhan reached RMB91 billion in 1997, and per capita GDP increased to RMB12,673, up 16% over The total GFA for Wuhan residential properties amounted to 1.02 milion sq. m., down from 1.07 million sq. m. in Since 1993, the city has maintained its top rank as a critical component of the Company s PRC development portfolio and has produced substantial cash flow and profit over the last few years. City Statistics Over the next three fiscal years, the following projects will be completed: % Change Population (million) Per capita GDP (RMB) 12,673 6, GDP growth (%) (26.3) Per capita annual disposable income of urban residents (RMB) 5,573 3, Per capita saving deposits of urban and rural residents (RMB) Not available 2,438 N/A Per capita living space (sq. m.) Source: 98 Statistical Yearbook of Wuhan GFA Attributable Usage (sq. m.) Interest (%) FY00 Wuhan International Trade & Commerce Centre C 20, (Main Building) Wuhan Changqing Garden R 192,477 Note Total FY00 212,915 FY01 Wuhan Changqing Garden R 472,000 Note Total FY01 472,000 FY02 Wuhan Changqing Garden R 300,000 Note Total FY02 300,000 R: Residential C: Commercial Note: The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. Annual Report

40 Wuhan Changqing Garden Phase II Wuhan Changqing Garden Phase I Wuhan Portfolio by Type (GFA) Total 4,104 thousand sq. m. Wuhan Conventional Property Total 475 thousand sq. m. Progress on Key Projects WUHAN CHANGQING GARDEN Conventional Property 12% Low-cost Community Housing 88% Residential 68% Commercial 24% Office 2% Hotel 6% Wuhan Changqing Garden is one of the largest residential community housing projects ever conceived in the PRC. The estimated investment is expected to be RMB5.5 billion over an eight- to tenyear period, and the Company is following a multi-phased approach in the construction of the project. Wuhan Low-cost Community Housing Total 3,629 thousand sq. m. Changqing Garden is the Company s flagship development in the mass residential market and holds a number of distinguished records within the city, province and country. In 1998, the New World China Land Limited Residential 97% Commercial 3% 38

41 Business Review: Wuhan Clubhouse of Wuhan Changqing Garden Market of Wuhan Changqing Garden Wuhan International Trade and Commerce Centre (Annex) project was top in sales in terms of the area and value of property sold in Wuhan City. Furthermore, Phase III of the development was designated by the Ministry of Construction and the State Council as a National Model Residential Community District. Changqing Garden encompasses a satellite town of 150,000 people on a 2.3 million sq. m. plot of land at the entrance of the Wuhan Airport Expressway. About 63% of the development is dedicated to low-cost residential premises, 30% is earmarked for commodity premises (such as retail areas and shopping malls), and 7% is set aside for public facilities. The project is currently developing its third phase with a GFA of 315,506 sq. m. Sales progress has been exceptional and completion of Phase III is scheduled for FY01. WUHAN INTERNATIONAL TRADE AND COMMERCE CENTRE This property is located next to a main road in the Jianghan District, which is a new commercial district in the city centre. The project is composed of a ten-storey commercial building and a one-level basement ( Annex Building ) and a sixstorey podium in a 52-storey commercial development ( Main Building ). Construction of the Annex Building was completed in Its commercial portion is currently occupied by Wuhan New World Department Store. The Annex Building also offers 9,423 sq. m. of office space which has maintained a satisfactory occupancy rate during the year. The Main Building of this project is under renovation and is expected to be completed in FY00. The completed GFA will amount to 20,438 sq. m. of commercial space. The Company intends to hold the Wuhan International Trade and Commerce Centre for long-term investment purposes. Annual Report

42 Business Review: Guangzhou GUANGZHOU AND GUANGZHOU CITY CENTRE MAP New World China Land Limited 40

43 Business Review: Guangzhou New World Eastern Garden Fangcun District Nos. 1, 2 and 4 Development Guangzhou is the metropolitan and commercial hub of Southern China, the fastest growing region in the country. With a population of 6.7 million growing at 5.8% per annum over the last four years, Guangzhou s GDP reached RMB184 billion in 1998, representing a 475% increase over Overall, Guangzhou is ranked only behind Beijing and Shanghai in terms of production output. The total GFA for residential properties in 1998 was 34.9 million sq. m., representing a 20% increase over Average per capita living space reached sq. m., an increase of 7% over the period. Guangzhou citizens are among the most affluent by any national standard, and this personal wealth makes the city a favourable place for property developers. Progress on Key Projects NEW WORLD EASTERN GARDEN (TIANHE SHIPAI LOT NO.4) Phase I of New World Eastern Garden was fully sold within a very short period of time after its launch in FY98. The Company is moving onto Phase II of the development which has a GFA of 44,916 sq. m. and is expecting to launch the project in early Annual Report

44 Guangzhou Portfolio by Type (GFA) Total 4,082 thousand sq. m. Guangzhou Community Housing Total 3,030 thousand sq. m. TIANHE SHIPAI LOT NOS.2 & 5 DEVELOPMENT Conventional Property 6% Community Housing 74% Low-cost Community Housing 20% Guangzhou Conventional Property Total 252 thousand sq. m. Residential 89% Commercial 8% Office 3% Guangzhou Low-cost Community Housing Total 800 thousand sq. m. Located within a few minutes walk from New World Eastern Garden, this project is tailored to the mass residential market of Tianhe District and offers similar amenities as New World Eastern Garden. Master planning for the project is under preparation. THE JIXIAN ZHUANG DEVELOPMENT The Jixian Zhuang Development is located 20 minutes from the city centre. Located beside the Xinguangcong Expressway. The site is next to a number of tertiary education institutions, such as the Guangzhou University and Guangzhou Traditional Chinese Medicine University. New World China Land Limited Residential 83% Commercial 15% Office 2% Residential 90% Commercial 10% 42

45 Business Review: Guangzhou New World Riverside Villa Zone 14 Jixian Zhuang Low-cost Housing Development New World Casa California Zone 13 City Statistics % Change Population (million) Per capita GDP (RMB) 27,500 15, GDP growth (%) (31.0) Per capita annual disposable income of urban residents (RMB) 11,256 Not available N/A Per capita saving deposits of urban and rural residents (RMB) 27,261 10, Per capita living space (sq. m.) Source: 99 Statistical Yearbook of Guangzhou Over the next three fiscal years, the following projects will be completed : GFA Attributable Usage (sq. m.) Interest (%) FY00 Jixian Zhuang Low-cost Housing Development R 180,000 Note Total FY00 180,000 FY01 Guangzhou New World Casa California Zone 13 R 20, Guangzhou New World Eastern Garden R,C 44, Guangzhou Fangcao Garden R,C 40, Jixian Zhuang Low-cost Housing Development R 43,000 Note The development comprises over 1.7 million sq. m. of GFA with the majority of space designated to mass residential units. Community facilities such as schools, shopping markets, bus stops, a cultural centre and a sports stadium will also be built within the development. The project is one of the largest of its kind in Guangzhou and will be developed over a period of eight to ten years. The initial phase of this project comprises 180,000 sq. m. of GFA, of which 150,000 sq. m. was exclusively sold to the Education Bureau of the Guangzhou City Government. This transaction marks an initial success in untapping the tremendous potential of this development. The area is due for completion and occupancy in late Total FY01 148,460 FY02 Guangzhou New World Eastern Garden R,C 50, Guangzhou Tianhe Shipai Lot Nos. 2 & 5 R,O,C 64, Guangzhou Fangcao Garden R,C 80, Jixian Zhuang Low-cost Housing Development R 81,000 Note Total FY02 276,058 R: Residential O: Office C: Commercial Note: The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. Annual Report

46 Business Review: Pearl River Delta New World China Land Limited PEARL RIVER DELTA REGIONAL MAP 44

47 Business Review: Pearl River Delta Due to advances of the Open Door Policy, the Pearl River Delta has made extraordinary gains in terms of economic growth and employment opportunity since the early 1980s. The region s purchasing power, especially in cities such as Shenzhen, Dongguan and Zhuhai, has increased substantially over the last two decades. After years of economic growth, the population of this region has accumulated enormous savings relative to the country as a whole. This factor has translated into a strong demand for new housing among the local population. In addition, due to the proximity of these southern cities to Hong Kong, a substantial demand for properties is also generated from Hong Kong. Regional Statistics % Change Population (million) Per capita GDP (RMB) 10,428 6, GDP growth (%) (44.5) Per capita annual disposable income of urban residents (RMB) 8,562 6, Per capita living space (sq. m.) Source: Guangdong Statistical Yearbook 1998 Over the next three fiscal years, the following projects will be completed: GFA Attributable Usage (sq. m.) Interest (%) FY00 Dongguan New World Garden Phase VII R 47, Xintang New World Garden R 31,132 Note Total FY00 78,671 FY01 Zhaoqing Lake Development R 100, Shenzhen Shatoujiao Development R,C 7, Dongguan New World Garden R 18, Xintang New World Garden R,C 19,748 Note Zhuhai New World Harbour front Garden R 62, Haikou Low-cost Housing Development R 31,500 Note Total FY01 238,987 FY02 Shenzhen Xilihu Development R 29, Zhaoqing Lake Development R 215, Shenzhen Shatoujiao Development R,C 41, Dougguan New World Garden R 23, Xintang New World Garden R,C 54,900 Note Haikou Low-cost Housing Development R 37,440 Note Total FY02 401,427 R: Residential C: Commercial Note: The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. Annual Report

48 Xintang New World Garden Dongguan New World Garden Huizhou Changhuyuan Development Pearl River Delta Portfolio by Type (GFA) Pearl River Delta Community Housing Progress On Key Projects Total 4,341 thousand sq. m. Total 2,357 thousand sq. m. DONGGUAN NEW WORLD GARDEN With Phase VII under construction, the Dongguan New World Garden has provided a mix of villas, medium-rise as well as high-rise apartments in its Conventional Property 17% Community Housing 55% Low-cost Community Housing 28% Residential 91% Commercial 7% Office 1% Hotel 1% previous six phases. Phases VI and VIII were launched for sale during FY99 and provide 34,092 sq. m. of highquality community style residential housing. The presale received very Pearl River Delta Conventional Property Total 758 thousand sq. m. Pearl River Delta Low-cost Community Housing Total 1,226 thousand sq. m. favourable response. SHENZHEN SHATOUJIAO DEVELOPMENT Shenzhen Shatoujiao Development is located 20 minutes from Shenzhen s city centre, only a few minutes from Hong Kong on the eastern border. The project New World China Land Limited Residential 89% Commercial 6% Hotel 5% Residential 100% features a variety of villa, duplex and high-rise residential apartments. Part of the project will be completed in beginning FY01. 46

49 Business Review: Other Regions Business Review: Other Regions HEFEI NEW WORLD GARDEN Over the next three fiscal years, the following projects will be completed: Construction of the Hefei New World Garden project began in December 1998 and is expected to be completed in The project comprises a community style residential development and is targeted at the city s low- to medium-end market. Phase I has a GFA of 108,468 sq. m. and has been launched to the market. Sales progress is favourable. DALIAN NEW WORLD PLAZA Other Regions Portfolio by Type (GFA) Total 753 thousand sq. m. Other Regions Community Housing Total 109 thousand sq. m. GFA Attributable Usage (sq. m.) Interest (%) FY01 Dalian New World Plaza R 35, Hefei New World Garden R,C 108, Total FY01 143,696 FY02 Nanjing New World Centre R,C,H 198, Total FY02 198,094 R: Residential C: Commercial H: Hotel Dalian New World Plaza is located at the heart of Zhongshan District and will comprise a twin-tower of offices and service apartment on top of a commercial podium with a total GFA of 137,767 sq. m. The initial phase of the development consists of 35,228 sq. m. of service apartment and will be launched on the market in FY00. Conventional Property 86% Community Housing 14% Conventional Property Total 644 thousand sq. m. Residential 93% Commercial 7% Residential 22% Commercial 58% Office 13% Hotel 7% Annual Report

50 Financial Review Turnover Analysis SUMMARY OF RESULTS (HK$,000) 600, , ,000 0 FY99 FY98 Interest Income Management Fee Income Rental Income Return On Costs Proforma Combined Profit & Loss Account FY99 FY98 % Change HK$'000 HK$'000 Turnover 506, , Operating profit 464, , Share of loss of associated companies (20,465) (22,951) (10.8) Share of (loss)/profit of jointly controlled entities (259,163) 39,169 (761.7) Profit before taxation 185, ,623 (14.9) Taxation (17,353) (38,191) (54.6) Profit after taxation 167, ,432 (6.4) Minority interests 3,195 10,516 (69.6) Profit attributable to shareholders 171, ,948 (9.9) Earnings per share basic (HK$) (10.3) Dividends 0 0 N/A Turnover The turnover increased by 24% to HK$506.9 million in FY99. Growth was mainly derived from interest income in Conventional Property Projects, in particular, interest income from Beijing New World Centre Phase I. The Group will continue to recognise interest income from this project as part of its investment return from financing the development and its operation. The Group also recognises turnover from leasing and managing properties. Turnover categorised as management fee and rental income from Conventional Property Projects showed satisfactory growth in FY99. The rise in management fee income was mainly contributed from New World Courtyard Beijing which commenced operation in July Rental income of Tianjin New World Anderson Centre registered a rise over The growth in turnover also came from New World China Land Limited interest income from the New World Eastern Garden Phase I which was completed in September

51 Financial Review Operating Profit Operating profit increased by 131% to HK$464.9 million in FY99. Contributions mainly came from Conventional Property Projects such as Beijing New World Centre Phase I and Tianjin New World Anderson Centre. Net Interest Expense Net interest expense increased by 15% to HK$74.0 million in FY99. Gross interest expense amounted to HK$170.5 million, an increase of 29% from FY98. The increase reflects the Group s intention to leverage its strong balance sheet. Share of Results of Associated Companies and Jointly Controlled Entities The share of results from associated companies and jointly controlled entities amounted to a net loss of HK$279.6 million in FY99 as compared with a net gain of HK$16.2 million in Taxation Though profit before taxation dropped 15%, taxation decreased by 55%. This disproportion was attributed to the sale of property projects through investment disposals. As a result, the effective tax rate decreased from 18% in FY98 to 9% in FY99. FY98. Although the contribution from Dongguan New World Garden and some other projects was much higher than last year, the extra gain was not enough to offset the share of provision made for Shanghai Zhongshan Square as a result of a soft residential market in Minority Interests Compared with FY98, minority interests showed a decrease of 70% to HK$3.2 million. This was mainly the result of the improvement to some of the startup projects. Shanghai and the interest expense incurred by Beijing New World Centre Phase I. Annual Report

52 ANALYSIS OF CONTRIBUTION (HK$ million) Attributable Operating Profit Breakdown by Project Type FY FY Conventional Property Community Housing Low-cost Community Housing Land Improvement Analysis of Attributable Operating Profit ( AOP ) by Project Type FY99 FY98 % Change HK$ million HK$ million CONVENTIONAL PROPERTY Operating profit Share of results of associated companies and jointly controlled entities (328.6) 1.1 N/A Taxation (3.1) (29.8) (89.6) Minority interests (74.0) (6.4) COMMUNITY HOUSING Operating profit ,483.3 Share of results of associated companies and jointly controlled entities Taxation (10.5) (8.4) 25.0 Minority interests LOW-COST COMMUNITY HOUSING Operating profit (34.8) Share of results of associated companies and jointly controlled entities N/A Taxation N/A Minority interests N/A (34.8) LAND IMPROVEMENT Operating profit N/A Share of of results of associated companies and jointly controlled entities 11.3 N/A Taxation (3.8) N/A Minority interests N/A 7.5 N/A New World China Land Limited ATTRIBUTABLE OPERATING PROFIT (15.4) HEAD OFFICE ITEMS (95.8) (125.7) (23.8) PROFIT ATTRIBUTABLE TO SHAREHOLDERS (9.9) 50

53 Financial Review Conventional Property AOP from Conventional Property Projects decreased by 6% in FY99 to HK$51.2 million. In FY98, the main contributor of AOP derived from sale of Beijing New World Centre Phase I. In FY99, AOP mainly included profit from investment disposals, comprising the Baiyun Garden in Guangzhou and the Spring Fountain Tower in Wuhan. In addition, investment properties, such as Tianjin New World Anderson Centre and Wuhan International Trade and Commerce Centre, recorded increased rental income. However, the increase in profit was mitigated by provisions made for Shanghai Zhongshan Square as a result of a soft residential market in Shanghai. Community Housing AOP from Community Housing Projects rose 455% in FY99 to HK$43.3 million. The increase was attributed to the continuing popularity of Dongguan New World Garden and a successful launch of Guangzhou New World Eastern Garden Phase I, of which over 90% of its units were sold during the year. Low-cost Community Housing The AOP decreased by 35% to HK$164.9 million with Low-cost Community Housing Projects in Tianjin and Wuhan as major contributors. The decrease was mainly due to two reasons. Firstly, interest income dropped as a result of the disposal of a Low-cost Community Housing Project in Shenyang in FY98. Secondly, the size of properties completed in FY98 such as Wuhan Changqing Garden Phase I and the Lowcost Community Housing Project in Shenyang was larger than the ones completed in FY99 such as Wuhan Changqing Garden Phase II and Tianjin Xin Chun Hua Yuan Lot 603. As a result, lower fixed return was recorded in FY99. Land Improvement AOP was generated from the sale of serviced land in Wujiashan Economic Development Area. Annual Report

54 Proforma Combined Balance Sheet FY99 FY98 % Change HK$ million HK$ million Fixed assets 1, , Deferred expenditure (24.5) Properties under development 3, , Associated companies 1, ,157.1 (0.8) Joint ventures 12, , Long term receivable (100.0) Net current assets / (liabilities) (348.3) (211.4) Summary of Liabilities and Equity FY99 FY98 % Change HK$ million HK$ million Share capital Reserves 15, , Long term liabilities 2, , Minority interests (25.0) FINANCIAL POSITION Properties Under Development Fixed Assets As part of the Group s strategy to increase its investment property portfolio, further investments were injected into the development of the Dalian New World Plaza and Wuhan There was a 43% increase in properties under development to HK$3.2 billion in FY99 from HK$2.2 billion in FY98. The sharp rise was a reflection of the Group's effort to accelerate the development in different regions. International Trade and Commerce New World China Land Limited Centre. This increase in fixed assets value was mitigated by a slight devaluation in the Group s existing investment property portfolio as a result of market adjustment in FY99. Associated Companies The slight decrease in the share of net assets of associated companies to HK$1.1 billion was primarily the net 52

55 Financial Review result of the disposal of the Harbin Beifang Hotel and the additional investment made in New World Courtyard, Shunde. Share Capital Since the balance sheets have been prepared under proforma combined basis as if a reorganisation for preparation of listing in July 1999 had taken Net Current Assets The rise in net current assets was mainly due to an increase in properties under development with completion expected by the end of FY00. These projects place as at the end of FY99 and FY98, the share capital represented the aggregate number of shares that would have been issued to NWD and for conversion of convertible bonds. include Tianjin Xin An Garden and Zhongshannanyi Road Development in Shanghai. DEBT PROFILES Maturity Profile FY99 FY98 % Change HK$ million HK$ million Long-term liabilities Within one year N/A 1 to 2 years N/A 2 to 5 years (9.6) Over 5 years N/A Terms as specified in joint venture contracts No specific repayment terms 1, , Sub-total 2, , Short-term loans (44.8) Total 3, , Annual Report

56 Reserves Apart from the profit retained and revaluation surplus in FY99, the major movement in reserve was the contributed surplus arising from the reorganisation. Minority Interests A 25% decrease to HK$130.5 million in minority interests was recorded mainly due to the losses recorded in certain property development projects in the PRC. Long Term Liabilities The increase in long term liabilities stemmed from the execution of the Group's financing strategy to maintain a healthy leverage together with a strong balance sheet. Debt to Equity Ratio The Group s debt to equity ratio increased to 20% in FY99 from 17% in FY98. The rise was attributed to a general increase in the debt position to finance its property projects in order to leverage the Group's strong balance sheet. Interest Rate Profile FY99 FY98 % Change HK$ million HK$ million Fixed rate 1, Floating rate Interest free (6.7) Total 3, , Nature of Debt FY99 FY98 % Change HK$ million HK$ million New World China Land Limited Unsecured 3, , Secured Total 3, ,

57 Financial Review CASH FLOWS ANALYSIS Cash Flows Analysis FY99 FY98 % Change HK$ million HK$ million Net cash outflow from operating activities (882.8) (1,060.9) (16.8) Net cash (outflow)/inflow from returns on investments and servicing of finance (48.6) 26.0 (286.9) Net cash outflow from investing activities (925.8) (2,302.0) (59.8) Net cash inflow from financing activities 1, ,506.8 (47.8) Operating Activities Net cash outflow from operating activities decreased 17% principally due to increase in operating income. of subsidiary holding in Baiyun Garden in Guangzhou, the return on investments from the Low-cost Community Housing Projects, particularly the Wuhan Changqing Garden and from Guangzhou New World Riverside Returns on Investments and Villa Zone 14. Servicing of Finance Interest received dropped by 22% to HK$62.1 million. The decrease was furthered by a rise in the interest expense payment as a result of increased external financing. Financing Activities A decrease of 48% in cash flows from financing activities was due principally to reduced capital injection from New World Development Company Limited to HK$1.1 billion from HK$3.0 billion. New Investing Activities A decrease of 60% was registered in net cash outflow from investing activities loans and short-term loans were raised for the amounts of HK$595.2 million and HK$375.5 million, respectively. due principally to reduced expenditure for investment in joint ventures. During the year, cash amounting to HK$298.8 million was generated from the disposal Annual Report

58 NWCL in the Financial Market STOCK PERFORMANCE Subsequent to the listing on the SEHK on 16 July 1999, the stock price of the Company experienced great volatility and has under-performed the Hang Seng Index. The Company was unfortunate enough to be listed on the market when sentiment towards the PRC suddenly turned weak due to PRC-Taiwan tension and a rumor regarding the devaluation of the Renminbi. The management firmly believes that the ability to deliver strong earnings growth is most vital to the improvement of NWCL s stock performance. It is with this belief that the management of NWCL is fully dedicated to producing strong results in the years ahead. INVESTOR RELATIONS The Company has taken a proactive approach to communicating with the investment community with an aim to better explain the Company s operations, strategies and the PRC property market as a whole. Senior executives place an emphasis on conducting road shows to maintain close relationships with investors. Site visits to the PRC will be arranged more frequently in the future to allow analysts and fund managers a chance to understand the PRC property market in a more in-depth manner. Shareholdings* Major shareholders: New World Development Company Limited HH Holdings Corporation New World Services Limited New shares issued at IPO Total number of shares in issue 960,945,493 shares 22,508,064 shares 16,546,443 shares 463,772,938 shares 1,463,772,938 shares New World China Land Limited * The shareholding information reflects the results of the Company s listing on SEHK subsequent to the year end. 56

59 Annual Report 1999 Report of the Directors The Directors have pleasure in presenting their first report together with the audited proforma accounts for the year ended 30 June GROUP REORGANISATION The Company was incorporated in the Cayman Islands on 28 August 1996 under the Companies Law (1995 Revision) of the Cayman Islands as an exempted company in the name of New World China Limited. By a resolution passed on 31 March 1999, the name of the Company was changed to its present name, New World China Land Limited. The Company had no profit nor loss during the period ended 30 June 1999 and the only asset of the Company was an investment in New World Development (China) Limited, an intermediate holding company, amounting to HK$2 as at that date. Accordingly no profit and loss account nor balance sheet have been presented for the Company as their inclusion, for the purpose of this report, is not considered meaningful. On 3 July 1999, pursuant to a corporate reorganisation ( Reorganisation ) in preparation of the listing of the Company s shares on The Stock Exchange of Hong Kong Limited ( the Stock Exchange ), the Company became the holding company of the subsidiaries, associated companies and joint ventures now comprising the Group. Details of the Reorganisation and the basis of preparation of the proforma accounts are set out in note 1 to the accounts. Although the reorganised Group did not legally exist until 3 July 1999, the Directors consider that it is more meaningful and appropriate to treat the Group as a continuing entity as if the current group structure had been in existence and thus to present the accounts on a proforma combined basis. GROUP ACTIVITIES The principal activity of the Company is investment holding. The principal activities of the principal subsidiaries, associated companies and joint ventures are shown in note 27 to the proforma accounts on pages 103 to 112. ACCOUNTS The proforma results of the Group for the year ended 30 June 1999 and the proforma state of affairs of the Group at that date are set out in the proforma accounts on pages 68 to 112. DIVIDENDS No dividend was paid by the subsidiaries during the year to the then shareholders prior to the Reorganisation and by the Company. The Directors do not recommend the payment of a final dividend in respect of the year ended 30 June SHARE CAPITAL Details of the movements in share capital of the Company are set out in note 17 to the proforma accounts. RESERVES Details of the movements in reserves are set out in note 18 to the proforma accounts. 57

60 New World China Land Limited PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES On 16 July 1999, the Company s shares were listed on the Stock Exchange. The Company has not redeemed any of its listed shares from that date up to the date of this report. Neither the Company nor any of its subsidiaries has purchased or sold any of the Company s listed shares during this period. FIXED ASSETS Details of the movements in fixed assets are set out in note 10 to the proforma accounts. DONATIONS Charitable and other donations made by the Group during the year amounted to HK$5,659,000. DIRECTORS The Directors of the Company since incorporation and at the date of this report were: Dr. Cheng Kar-shun, Henry (appointed on 28 August 1996) Mr. Chan Wing-tak, Douglas (appointed on 28 August 1996) Mr. Doo Wai-hoi, William (appointed on 3 June 1999) Mr. Cheng Kar-shing, Peter (appointed on 3 June 1999) Mr. Leung Chi-kin, Stewart (appointed on 3 June 1999) Mr. Chan Kam-ling (appointed on 3 June 1999) Mr. Chow Kwai-cheung (appointed on 3 June 1999) Mr. Chow Yu-chun, Alexander (appointed on 3 June 1999) Mr. So Ngok (appointed on 3 June 1999) Mr. Lo Hong-sui * (appointed on 3 June 1999) Mr. Fu Sze-shing (appointed on 3 June 1999) Mr. Cheng Wai-chee, Christopher * (appointed on 29 June 1999) Mr. Tien Pei-chun, James * (appointed on 29 June 1999) Ms. Sharon Pierson (appointed and resigned on 28 August 1996) * Independent non-executive Directors In accordance with Article 99 of the Company s Articles of Association, all current directors except Dr. Cheng Kar-shun, Henry and Mr. Chan Wing-tak, Douglas, retire at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election. No director has a service contract which is not determinable by the Company within one year without payment of compensation other than statutory compensation. 58

61 Report of the Directors Annual Report 1999 PRE-EMPTIVE RIGHTS No pre-emptive rights exist in the Cayman Islands in respect of the Company s share capital. DIRECTORS INTEREST IN CONTRACTS Save for contracts amongst group companies, no other contracts of significance in relation to the Company s business to which the Company, its subsidiaries, its holding company or fellow subsidiaries is a party, and in which any director had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year. CONNECTED TRANSACTIONS The Group had the following connected transactions taken place during the year: (1) Pursuant to a management agreement dated 1 September 1994 and supplementary agreement dated 31 August 1998, Kiu Lok Property Management (China) Limited ( KLPM ), a fellow subsidiary, has been appointed by Wuhan New Eagle Development Company Limited ( WNED ), a 95% owned subsidiary, as property manager for a term of 10 years providing estate management services for an investment property of the Group located in Wuhan. For the year ended 30 June 1999, WNED paid KLPM HK$218,000 in respect of its services provided. WNED also paid KLPM HK$125,000 agency commission for the year ended 30 June 1999, pursuant to another sole leasing agency contract dated 1 September 1994 in respect of provision of real estate agency services for the said investment property. (2) New World Finance Company Limited ( NWF ), a fellow subsidiary, has advanced HK$849,866,000 in aggregate to the Group as at 30 June The total interest charged by NWF for the year ended 30 June 1999 in relation to the above loans amounted to HK$76,346,000. These loans are unsecured, bear interest ranging from 12% to 15% per annum and have repayment terms as specified in the loan agreements. (3) Sexon Enterprises Limited ( Sexon ), a fellow subsidiary, has advanced HK$221,720,000 to Billion Huge (International) Limited ( BHI ), a wholly owned subsidiary of the Company. The interest charged by Sexon to BHI for the year ended 30 June 1999 amounted to HK$17,493,000. The loan is unsecured, bears interest at 10% per annum and has no specific repayment terms. (4) Hip Hing Contruction Company Limited( HH ), a fellow subsidiary, has advanced HK$90,000,000 to New World Development (China) Limited ( NWDC ), a wholly owned subsidiary of the Company. The interest charged by HH to NWDC for the year ended 30 June 1999 amounted to HK$426,000. The loan is unsecured, bears interest at 8.5% per annum and is repayble on 8th June (5) New World Development Company Limited ( NWD ), the Company s ultimate holding company, has paid New World Tower Company Limited, a fellow subsidiary, HK$5,308,000 in rental for office premises occupied by the Group. This amount paid by NWD on behalf of the Company has been included in the combined results by means of proforma adjustments to reflect the relevant portion of rental expense shared by the Group. 59

62 New World China Land Limited CONNECTED TRANSACTIONS (Continued) (6) NWD has provided guarantee in respect of US$300 million syndicated loan facility granted to NW China Homeowner Development Limited ( NWCHD ), a wholly owned subsidiary. A guarantee fee is payable by NWCHD to NWD and is calculated at 2% per annum on the average daily amount outstanding under such facility during a financial year and payable annually in arrears within thirty business days of the expiry of the relevant financial year. The outstanding balance of this loan at 30 June 1999 amounted to HK$744,000,000 and the guarantee fee paid to NWD for the year ended 30 June 1999 amounted to HK$17,008,000. (7) New World Department Store Tianjin Limited ( NWDST ), a fellow subsidiary, paid HK$1,586,000 estate management services fee to New World Anderson (Tianjin) Development Co., Ltd. ( NWATD ), a 51% owned subsidiary, in respect of estate management services provided to a property occupied by NWDST. The estate management fee is charged to NWDST at RMB12 per sq.m. from 1 November 1997 and at RMB18 per sq.m. from 1 November 1998 thereafter. (8) Polytown Projects Limited, a fellow subsidiary, has been appointed by Dalian New World Plaza International Co., Ltd. ( DNWP ), a 88% owned subsidiary, to provide project management services for construction of a property investment project located in Dalian ( the Property ). The accumulated project management fee in respect of its services rendered at 30 June 1999 and included as part of the development costs of the Property was HK$9,805,000 of which HK$1,002,000 was paid during the year. (9) Hip Hing Construction (China) Company Limited, a fellow subsidiary, has been appointed by DNWP as main contractor for the construction of the Property including foundation and superstructure works. The accumulated contract fee paid at 30 June 1999 and included as part of the development costs of the Property was HK$130,800,000 of which HK$37,739,000 was paid during the year. (10) Meprom Limited, a fellow subsidiary, has been appointed by DNWP as electrical engineer to provide engineering consultancy for the construction of the Property. The accumulated engineering consultancy fees in respect of the services rendered at 30 June 1999 and included as part of the development costs of the Property was HK$2,424,000 of which HK$1,452,000 was paid during the year. (11) Reliance China Limited, a former fellow subsidiary, has been appointed as the project management consultant in respect of two property development projects located in Shanghai. The accumulated project management fees paid at 30 June 1999 and included as part of the development costs of these properties was HK$48,900,000 of which HK$13,202,000 was paid during the year. (12)!"#$%&'!(), a substantial shareholder of Shanghai Heyu Properties Co., Ltd. ( SHPCL ), a 64% owned subsidiary of the Company, undertook to provide land development services to SHPCL pursuant to an agreement dated 9 December The aggregate service fees paid to! at 30 June 1999 and included as part of the development costs of the related property developed by SHPCL was HK$24,381,000 and no amount was paid to! for the year ended 30 June

63 Report of the Directors Annual Report 1999 DIRECTORS INTERESTS IN SECURITIES OF THE COMPANY On 16 July 1999, the Company s shares were listed on the Stock Exchange. Except for Mr Chow Kwai-cheung who is interested in 126 shares of the Company, none of the Directors and their associates has any beneficial or non-beneficial interests in the issued share capital of the Company from that date up to the date of this report. DIRECTORS INTERESTS IN SECURITIES OF THE ASSOCIATED CORPORATIONS OF THE COMPANY As at 30 June 1999, the interests of the Directors and their associates in the securities of the associated corporations within the meaning of the Securities (Disclosure of Interests) Ordinance (the SDI Ordinance ) were as follows: Personal interests Corporate interests (1) Number of shares/ Number of shares/ Amount of bonds Amount of bonds New World Infrastructure Limited (Ordinary shares of HK$1.00 each) Mr. Chan Wing-tak, Douglas 500,000 Mr. Chan Kam-ling 6,800 New World Infrastructure Limited (1% Convertible Bonds due 2003) Mr. Cheng Wai-chee, Christopher US$2,570,000 New World Development Company Limited (Ordinary shares of HK$1.00 each) Mr. Leung Chi-kin, Stewart 23,253 Mr. Chan Kam-ling 90,470 Mr. Chow Kwai-cheung 20,818 Extensive Trading Company Limited (Non-voting deferred shares of HK$1.00 each) Mr. Cheng Kar-shing, Peter 380,000 Mr. Leung Chi-kin, Stewart 160,000 Mr. Chan Kam-ling 80,000 Mr. Chow Kwai-cheung 80,000 Mr. Chow Yu-chun, Alexander 80,000 61

64 New World China Land Limited DIRECTORS INTERESTS IN SECURITIES OF THE ASSOCIATED CORPORATIONS OF THE COMPANY (Continued) Personal interests Corporate interests (1) Number of shares/ Number of shares/ Amount of bonds Amount of bonds Hip Hing Construction Company Limited (Non-voting deferred shares of HK$ each) Mr. Chan Kam-ling 15,000 HH Holdings Corporation (Ordinary shares of HK$1.00 each) Mr. Chan Kam-ling 15,000 International Property Management Limited (Non-voting deferred shares of HK$10.00 each) Mr. Chan Kam-ling 1,350 Master Services Limited (Ordinary shares of US$0.01 each) Mr. Leung Chi-kin, Stewart 16,335 Mr. Chan Kam-ling 16,335 Mr. Chow Kwai-cheung 16,335 Mr. Chow Yu-chun, Alexander 16,335 Matsuden Trading Company Limited (Non-voting deferred shares of HK$1.00 each) Mr. Leung Chi-kin, Stewart 44,000 Mr. Chan Kam-ling 44,000 Mr. Chow Kwai-cheung 44,000 Mr. Chow Yu-chun, Alexander 44,000 62

65 Report of the Directors Annual Report 1999 DIRECTORS INTERESTS IN SECURITIES OF THE ASSOCIATED CORPORATIONS OF THE COMPANY (Continued) Personal interests Corporate interests (1) Number of shares/ Number of shares/ Amount of bonds Amount of bonds New World Services Limited (Ordinary shares of HK$0.10 each) Mr. Cheng Kar-shing, Peter 3,382,788 Mr. Leung Chi-kin, Stewart 4,214, ,745 Mr. Chan Kam-ling 10,602,565 Mr. Chow Kwai-cheung 2,562,410 Mr. Chow Yu-chun, Alexander 2,562,410 Progreso Investment Limited (Non-voting deferred shares of HK$1.00 each) Mr. Leung Chi-kin, Stewart 119,000 Tai Yieh Construction & Engineering Company Limited (Non-voting deferred shares of HK$1, each) Mr. Chan Kam-ling 250 Urban Property Management Limited (Non-voting deferred shares of HK$1.00 each) Mr. Cheng Kar-shing, Peter 750 Mr. Leung Chi-kin, Stewart 750 Mr. Chow Kwai-cheung 750 Mr. Chow Yu-chun, Alexander 750 YE Holdings Corporation (Ordinary shares of HK$1.00 each) Mr. Leung Chi-kin, Stewart 37,500 Note (1): These shares were beneficially owned by a company in which the relevant director is deemed to be entitled under the SDI Ordinance to exercise or control the exercise of one third or more of the voting power at its general meeting. Save as disclosed above, as at 30 June 1999, none of the Directors, chief executive or any of their associates had any beneficial or nonbeneficial interests in the securities of or any of its associated corporations of the Company as defined in the SDI Ordinance. 63

66 New World China Land Limited DIRECTORS RIGHTS TO ACQUIRE SHARES OR DEBENTURES Under a share option scheme of a fellow subsidiary, New World Infrastructure Limited ( NWI ), options may be granted to directors and employees of NWI or its subsidiaries to subscribe for shares in NWI. The following directors of the Company are also directors of NWI and have personal interests in share options to subscribe for shares in NWI which have been granted to them during the year as follows: Number of share options outstanding at 30 June 1999 with exercise price per share of Name of directors Date of grant HK$10.20 (1) HK$12.00 (2) Dr. Cheng Kar-shun, Henry 2 December ,000 2,400,000 Mr. Cheng Kar-shing, Peter 1 December , ,000 Mr. Doo Wai-hoi, William 16 December , ,000 Mr. Leung Chi-kin, Stewart 8 December , ,000 Mr. Chan Kam-ling 9 December , ,000 Mr. Chan Wing-tak, Douglas 26 November ,000 1,280,000 Mr. So Ngok 26 November , ,000 Mr. Cheng Wai-chee, Christopher 11 December , ,000 Notes: (1) Exercisable from 1 July 1999 to 1 June 2004 (2) Divided into 3 tranches exercisable from 1 July 2000, 2001 and 2002 to 1 June 2004, respectively. Save as disclosed above, at no time during the year was the Company, its subsidiaries, its fellow subsidiaries or its holding company a party to any arrangements to enable the directors of the Company or chief executive or any of their spouse or children under the age of 18 to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. SUBSTANTIAL SHAREHOLDERS INTERESTS IN SHARES As at 30 June 1999, the Company was an indirect wholly owned subsidiary of New World Development Company Limited. Up to the date of this report, the register of substantial shareholders maintained under Section 16(1) of the SDI Ordinance shows that the following parties had interests of 10% or more of the issued share capital of the Company: Name Number of shares held Chow Tai Fook Enterprises Limited 1,000,000,000 (Note 1) New World Development Company Limited ( NWD ) 1,000,000,000 (Note 2) 64

67 Report of the Directors Annual Report 1999 SUBSTANTIAL SHAREHOLDERS INTERESTS IN SHARES (Continued) Notes: (1) Chow Tai Fook Enterprises Limited and its subsidiaries have interests in more than one-third of the issued shares of NWD and is accordingly deemed to have an interest in the shares deemed to be interested by NWD. (2) This interest represents the 960,945,490 shares directly held by NWD, 3 shares held by New World China Finance Limited ( NWCF ), 22,508,064 shares held by Great Worth Holdings Limited ( GWH ) and 16,546,443 shares held by High Earnings Holdings Limited ( HEH ). NWCF is a wholly owned subsidiary of NWD, and GWH and HEH are 59% and 51.3% indirectly owned subsidiaries of NWD respectively. NWD is deemed to have interests in the shares held by NWCF, GWH and HEH. Save as disclosed above, there is no other interest recorded in the register that is required to be kept under Section 16(1) of the SDI Ordinance up to the date of this report. MANAGEMENT CONTRACTS No contracts concerning the management and administration of the whole or any substantial part of the business of the Company were entered into or existed during the year. CODE OF BEST PRACTICE The Company has complied with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ) from 16 July 1999 (date of listing of the Company s shares) to the date of this report, except that the non-executive directors are not appointed for a specific term as they are subject to retirement by rotation at Annual General Meeting in accordance with Article 116 of the Company s Articles of Association. AUDIT COMMITTEE On 29 June 1999, the Company has established an audit committee which comprises three non-executive directors. MAJOR CUSTOMERS AND SUPPLIERS During the year, less than 30% of the Group s turnover and less than 30% of the Group s purchases were attributable to the Group s five largest customers and five largest suppliers respectively. YEAR 2000 ISSUE The Group is fully aware of the importance of the Year 2000 ( Y2K ) issue which generally refers to the failure of certain computer software and electronic systems to be able to correctly process four-digit year dates beginning with the Year The Group has established a business plan to address the Y2K issue since early 1998 and the plan has been based on Y2K conformity requirements issued by the British Standards Institute. Such plan covered implementation of data conversion and upgrading for major computer softwares, in-house developed programs and hardwares and also included a thorough impact analysis relating to assessment of compliance of data sensitive devices pertaining to the computing network such as telephone exchange system, data transmission equipment and electronic computing items. Following the completion of impact analysis, action tasks in respect of potential non-compliant devices identified was then formulated individually with target dates. These tasks had been completed as of today and testing for each of the targeted area had been conducted accordingly. The results of the testing indicated that critical systems of the Group are now Y2K compliant. Total cost incurred in relation to the plan has no significant impact to the Group. 65

68 New World China Land Limited YEAR 2000 ISSUE (Continued) A contingency plan has been prepared to cater for any unforeseeable disruptions including data back-up, extra standby hardwares and arranging on-site standby of key systems staff on critical dates. The Group has not taken up insurance cover for potential losses caused by the Y2K issue since the Directors believe that the Y2K issue has insignificant impact to the Group because the business of the Group is not heavily dependent on computerisation. PRACTICE NOTE 19 OF THE LISTING RULES SUPPLEMENTARY INFORMATION In accordance with the requirements under part 3.3 of Practice Note 19 ( PN 19 ) of the Listing Rules, the Directors of the Company reported below the details of advances to, and guarantees given for the benefit of, their affiliated companies ( as defined by PN 19) as at 30 June In aggregate the Company and its subsidiaries had advanced an amount of HK$8,141,870,000 to affiliated companies (included in amounts disclosed in notes 13 to 14 to the proforma accounts), guaranteed bank loans and other borrowing facilities for the benefit of the affiliated companies in the amount of HK$223,629,000 ( included in the amount disclosed in note 20 to the proforma accounts) and contracted to further provide an aggregate amount of HK$4,423,070,000 in capital (included in the amount disclosed in note 21 to the proforma accounts) and loans to affiliated companies. The advances are unsecured, have no fixed repayment terms and are interest free except for an aggregate amount of HK$6,232,793,000 which bear interest ranging from 4% to 12% per annum. Contracted capital and loan contributions to affiliated companies would be funded by proceeds from the initial public offering, internal resources and bank borrowings of the Group. In addition, in accordance with the requirements under part 3.10 of PN 19, the Company is required to include in its annual report a proforma combined balance sheet of its affiliated companies which should include significant balance sheet classifications and state the attributable interest of the Company in the affiliated companies. The Company has numerous affiliated companies and is of the opinion that it is not practical nor meaningful to prepare a proforma combined balance sheet and such information may be misleading. Pursuant to PN 19 the Company made an application to, and has received a waiver from, the Stock Exchange to provide as an alternative the following statement. As at 30 June 1999, the Group s total exposure on the combined indebtedness reported by such affiliated companies (including amounts owing to the Group) amounted to approximately HK$14,235,192,000. Such affiliated companies reported no capital commitments and contingent liabilities as at 30 June AUDITORS The proforma accounts have been audited by Messrs PricewaterhouseCoopers, who retire and, being eligible, offer themselves for re-appointment. On behalf of the Board Cheng Kar-shun, Henry Chairman Hong Kong, 15 October

69 Annual Report 1999 Report of the Auditors TO THE SHAREHOLDERS OF NEW WORLD CHINA LAND LIMITED (Incorporated in the Cayman Islands with limited liability) We have audited the proforma accounts on pages 68 to 112 which have been prepared in accordance with accounting principles generally accepted in Hong Kong. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS The directors of the Company are responsible for the preparation of the proforma accounts which give a true and fair view. In preparing proforma accounts which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently. It is our responsibility to form an independent opinion, based on our audit, on those proforma accounts and to report our opinion to you. BASIS OF OPINION We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the proforma accounts. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the proforma accounts, and of whether the accounting policies are appropriate to the circumstances of the Group, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the proforma accounts are free from material misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the proforma accounts. We believe that our audit provides a reasonable basis for our opinion. OPINION In our opinion the proforma accounts give a true and fair view, in all material respects, of the proforma state of affairs of the Group as at 30 June 1999 and of the proforma profit and cash flows for the year then ended and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance. PricewaterhouseCoopers Certified Public Accountants Hong Kong, 15 October

70 New World China Land Limited Proforma Combined Profit and Loss Account For the year ended 30 June 1999 Note HK$ 000 HK$ 000 Turnover 3 506, ,068 Operating profit 4 464, ,405 Share of results of Associated companies (20,465) (22,951) Jointly controlled entities (259,163) 39,169 Profit before taxation 185, ,623 Taxation 8 17,353 38,191 Profit after taxation 167, ,432 Minority interests 3,195 10,516 Profit attributable to shareholders and retained for the year 171, ,948 Retained by: Company and subsidiaries 485, ,921 Associated companies (20,465) (22,951) Jointly controlled entities (294,225) , ,948 Earnings per share cents 14.5 cents 68

71 Annual Report 1999 Proforma Combined Balance Sheet As at 30 June 1999 Note HK$ 000 HK$ 000 Fixed assets 10 1,926,775 1,878,931 Properties under development 11 3,185,966 2,233,029 Deferred expenditure 12 20,723 27,363 Associated companies 13 1,148,341 1,157,124 Joint ventures 14 12,422,884 12,110,851 Long term receivable 15 58,396 Net current assets/(liabilities) ,026 (348,341) Employment of funds 19,092,715 17,117,353 Share capital , ,377 Reserves 18 15,908,102 14,696,314 Shareholders funds 16,039,479 14,827,691 Long term liabilities 19 2,922,689 2,115,800 Minority interests 130, ,862 Funds employed 19,092,715 17,117,353 Dr. Cheng Kar-shun, Henry Director Mr. Doo Wai-hoi, William Director 69

72 New World China Land Limited Proforma Combined Cash Flow Statement For the year ended 30 June 1999 Note HK$ 000 HK$ 000 Net cash outflow from operating activities 22(a) (882,838) (1,060,904) Returns on investments and servicing of finance Interest received 62,085 79,639 Interest paid (128,355) (53,647) Dividend received from a jointly controlled entity 17,700 Net cash (outflow)/inflow from returns on investments and servicing of finance (48,570) 25,992 Taxation Hong Kong profits tax refunded 9 Investing activities Additions to fixed assets (184,001) (73,713) Deferred expenditure incurred (937) (13,116) (Increase)/decrease in investments in associated companies (128,555) 188,472 Increase in investments in joint ventures (912,899) (2,698,337) Disposal of interests in subsidiaries 22 (b) 61,798 Repayment of investments in joint ventures 236, ,212 Disposal of fixed assets 1,753 Decrease in long term receivable 138,444 Net cash outflow from investing activities (925,852) (2,302,038) Net cash outflow before financing activities (1,857,251) (3,336,950) Financing activities Increase in bank loan and other borrowings 595,153 93,818 Repayment of long term bank loan and other borrowings (222,584) (45,266) Increase in short term loans 375, ,292 Contribution from ultimate holding company prior to the Reorganisation 1,112,730 3,016,493 Contribution from minority shareholders 8,646 16,868 Increase in loans from minority shareholders 31, ,757 Repayment of loans from minority shareholders (71,870) (15,159) Net cash inflow from financing activities 22(c) 1,829,530 3,506,803 (Decrease)/increase in cash and bank balances (27,721) 169,853 Cash and bank balances at beginning of year 411, ,780 Cash and bank balances at end of year 383, ,633 70

73 Annual Report 1999 Notes to the Proforma Accounts 1. GROUP REORGANISATION AND BASIS OF PREPARATION The Company was incorporated as an exempted company in the Cayman Islands on 28 August 1996 under the name of New World China Limited. By a special resolution passed on 31 March 1999, the name of the Company was changed to its present name. As a result of the reorganisation ( Reorganisation ) undertaken since 1997 to rationalise the Group s structure in preparation for the listing of the shares of the Company on The Stock Exchange of Hong Kong Limited (the Stock Exchange ), New World Development (China) Limited ( NWDC ) became an intermediate holding company and the Company became the ultimate holding company of the companies now comprising the Group. The Reorganisation involved, inter alias, the following: (a) New World Development Company Limited ( NWD ), the ultimate holding company, transferring all of the rights and interests (with certain exceptions) in land or properties held by the NWD group in the People s Republic of China ( PRC ) to NWDC. In consideration of the capitalisation by the Company of HK$12,167,350,000 being debts due from the Company to NWD as at 31 March 1999, NWD will be allotted and issued with 999,999,997 shares of HK$0.1 each of the Company; and (b) NWD, in consideration of New World China Finance Limited ( NWCF ), a wholly-owned subsidiary of NWD which issued US$350,000,000 Convertible Bonds (the Bonds ) in 1996, waiving payment of the same amount by NWD, assigned to NWCF its interest and right to payment of the sum of HK$2,716,000,000 due from the Company. Pursuant to the terms of the Bonds, the Company will capitalise this amount through the issue of 313,772,938 shares of HK$0.1 each. Although the current group structure resulting from the Reorganisation did not legally exist as at 30 June 1999, the directors consider that it is more appropriate and meaningful to treat the Group as a continuing entity and the Company as the holding company of the Group as if the current group structure and business activities had been in existence for the two years ended 30 June Accordingly, the proforma combined balance sheets as at 30 June 1999 and 1998 and proforma combined profit and loss accounts and cash flow statements for the years then ended have been prepared on the basis as if the current group structure had been in existence as at those dates. In addition, proforma adjustments have been made to the proforma combined results of the Group to reflect an appropriate level of administrative and management expenses that would have been incurred by the Group during the two years then ended. All significant intra-group transactions and balances have been eliminated on combination. In the opinion of the directors, the proforma combined accounts prepared on the above basis more fairly present the results and state of affairs of the Group as a whole in light of the Reorganisation and subsequent listing of the shares of the Company. 71

74 New World China Land Limited 2. PRINCIPAL ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of the proforma accounts, which conform with accounting principles generally accepted in Hong Kong and with accounting standards issued by the Hong Kong Society of Accountants, are as follows: (a) Subsidiaries A company, including equity and co-operative joint ventures in the PRC, is a subsidiary if more than 50% of the voting capital is held for the long term or if the composition of the board of directors is controlled by the Group. (b) Associated companies An associated company is a company, not being a subsidiary, in which an equity interest is held for the long term and significant influence is exercised through representatives on the board of directors and there is no contractual arrangement to establish joint control over the economic activities of the company. The Group s investments in associated companies also include joint ventures in the PRC in which the composition of the board of directors is controlled by the Group s associated companies. Investments in associated companies are included in the balance sheet at the Group s share of net assets. (c) Joint ventures (i) Jointly controlled entities A joint venture is classified as a jointly controlled entity if it is held for the long term and a contractual arrangement is established between the participating venturers and whereby the Group together with the venturers undertake an economic activity which is subject to joint control and none of the venturers has unilateral control over the economic activity. (a) Equity joint ventures Equity joint ventures are Sino-foreign joint ventures in respect of which the partners capital contribution ratios are defined in the joint venture contracts and the partners profit sharing ratios are in proportion to the capital contribution ratios. The Group s investments in equity joint ventures are accounted for on the same basis as associated companies where the Group has joint control over the joint ventures activities. (b) Co-operative joint ventures Co-operative joint ventures are Sino-foreign joint ventures in respect of which the partners profit sharing ratios and share of net assets upon the expiration of the joint venture periods are not in proportion to their capital contribution ratios but are as defined in the joint venture contracts. The Group s investments in cooperative joint ventures are carried at cost plus its share of post-acquisition results of the joint ventures in accordance with the defined profit sharing ratios, less provision for any permanent diminution in value where the Group has joint control over the joint ventures activities. 72 (c) Other joint ventures Other than those described in (a) and (b) above, joint ventures which are corporations established outside the PRC and there are contractual arrangements established between the participating venturers to undertake economic activities which is subject to joint control are classified as other joint ventures. The Group s investments in other joint ventures are accounted for on the same basis as associated companies.

75 Notes to the Proforma Accounts Annual Report PRINCIPAL ACCOUNTING POLICIES (Continued) (c) Joint ventures (Continued) (ii) Fixed return joint ventures A joint venture is classified as a fixed return joint venture if it is held for the long term and it gives fixed rate returns which is predetermined in accordance with the provisions of the joint venture contracts. Fixed return joint ventures are carried at cost plus Return on Costs (note (l) (ii)) less provision for any permanent diminution in value. (d) Fixed assets and depreciation (i) Investment properties Investment properties are interests in land and buildings in respect of which construction work and development have been completed and are held for their investment potential. The investment properties are stated at open market value based on an annual professional valuation at the balance sheet date. Increases in valuation are credited to the investment property revaluation reserve; decreases are first set off against earlier revaluation surpluses on a portfolio basis and thereafter charged to the profit and loss account. Upon sale of an investment property, the revaluation surplus realised is transferred to operating profit. No depreciation is provided on investment properties held on leases of more than twenty years. (ii) Hotel properties Hotel properties are interests in land and buildings and their integral fixed plant which are collectively used in the operation of hotel. They are stated in the balance sheet at their open market value on the basis of an annual professional valuation. Increases in valuation are credited to the hotel properties revaluation reserve; decreases are first set off against earlier revaluation surpluses and thereafter charged to the profit and loss account. No depreciation is provided on hotel properties held on leases of more than twenty years. It is the Group s practice to maintain the buildings in a continual state of sound repairs and to make improvements thereto from time to time and accordingly, the directors consider that given the estimated lives of the hotel properties, any depreciation would be insignificant due to their high residual value. Such expenditure on repairs and improvements is charged to the profit and loss account in the year in which they are incurred. (iii) Assets under construction No depreciation is provided on assets under construction. All direct and indirect costs relating to the construction of fixed assets including interest and financing costs and foreign exchange differences on the related borrowed funds during the construction period are capitalised as the costs of the fixed assets. 73

76 New World China Land Limited 2. PRINCIPAL ACCOUNTING POLICIES (Continued) (d) Fixed assets and depreciation (Continued) (iv) Other fixed assets Other fixed assets, including other properties which are interests in land and buildings other than investment properties and hotel properties, are stated at cost less accumulated depreciation. Depreciation of fixed assets is calculated to write off the cost of assets over their estimated useful lives, using the straight line method. Estimated useful lives are summarised as follows: Land held on long or medium-term lease Buildings Leasehold improvements Furniture, fixtures and equipment Motor vehicles Unexpired period of the lease 20 years 10 years or over the relevant lease period 5 years 3 years (e) Deferred expenditure Pre-operating expenses are amortised over five years by equal annual instalments commencing from the first year of operation. Loan procurement expenses are amortised on a straight line basis over the relevant loan periods. (f) Properties under development Properties under development are stated at cost less provision for any possible loss and are classified as non-current assets if they are due for completion more than one year from the balance sheet date or as current assets if they are due for completion within one year from the balance sheet date. Cost comprises land cost, development expenditure, professional fees and interest capitalised. (g) Completed properties held for sale Completed properties held for sale is stated at the lower of cost and net realisable value. Net realisable value is determined by reference to management estimates based on prevailing market conditions. (h) Operating leases Leases where substantially all the rewards and risks of ownership of assets remain with the lessors are accounted for as operating leases and rental payable is accounted for on a straight line basis over the periods of the leases. (i) Deferred taxation Deferred taxation is accounted for at the current tax rate in respect of timing differences between profit as computed for taxation purposes and profit as stated in the accounts to the extent that a liability or an asset is expected to be payable or receivable in the foreseeable future. (j) Capitalisation of interest and finance charges Interest and finance charges on borrowings relating to properties under development are included in the cost of the development during the period of development. 74

77 Notes to the Proforma Accounts Annual Report PRINCIPAL ACCOUNTING POLICIES (Continued) (k) Foreign currencies Transactions in foreign currencies are translated at exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at rates of exchange ruling at that date. Exchange differences arising in these cases are dealt with in the profit and loss account, other than those dealt with in notes (d) (iii) and (j) above. The accounts of overseas subsidiaries, associated companies and jointly controlled entities expressed in foreign currencies are translated at rates of exchange ruling at the balance sheet date. Exchange differences arising therefrom are dealt with as a movement in reserves. (l) Revenue recognition Revenue is recognised when it is probable that future economic benefits will flow to the Group and these benefits can be measured reliably on the following bases: (i) Property sales Revenue from sale of properties is recognised either when the sale agreement is completed or when the development is completed which is determined by the issuance of the completion certificate by the relevant government authorities, whichever is the later. Deposits and instalments received on properties sold prior to their completion are included in current liabilities. (ii) Return on Costs Return on Costs represents investments return received and receivable in respect of the Group s interest in low-cost community housing which is calculated by reference and limited to 15 per cent. on the aggregate qualifying construction and development costs (the Return on Costs ) as provided by the respective joint venture agreements. Return on Costs is recognised only upon completion of a distinct phase of low-cost community housing when the relevant buildings are examined and approved for occupation by the relevant authority, or when the obligations undertaken by the PRC joint venture partners of the respective joint ventures to pay the Return on Costs become due, whichever is the earlier. (iii) Interest income (a) Interest income in respect of loan financing provided to associated companies and jointly controlled entities financing the development of property projects during the development period is deferred and recognised on the same basis as property sales (note (l) (i)). (b) Interest income in respect of loan financing provided to associated companies and jointly controlled entities other than those engaged in property development during their pre-operational period is deferred and amortised over the repayment period of the loan. 75

78 New World China Land Limited 2. PRINCIPAL ACCOUNTING POLICIES (Continued) (l) Revenue recognition (Continued) (iii) Interest income (Continued) (c) Interest income in respect of loan financing provided to fixed return joint ventures financing the development of low-cost community housing is recognised on a time proportion basis. (d) Other than those described in (a) to (c) above, interest income is recognised on a time proportion basis. (iv) Rental income Rental income is recognised on a straight line accrual basis over the terms of lease agreements. (v) Management fee income (a) Management fee income in respect of management services provided to associated companies and jointly controlled entities engaged in property development during the development period is deferred and recognised on the same basis as property sales (note (l) (i)). (b) Other than those described in (a) above, management fee income is recognised upon provision of management services. (vi) Dividend income Dividend income is recognised when the shareholder s right to receive payment is established. 76

79 Notes to the Proforma Accounts Annual Report TURNOVER AND PROFIT ATTRIBUTABLE TO SHAREHOLDERS Turnover comprises Return on Costs in respect of low-cost community housing, revenue from rental operations, management fee income and interest income in respect of loan financing provided to associated companies and joint ventures, net of withholding tax HK$ 000 HK$ 000 Return on Costs 28,724 79,749 Rental income 45,910 39,554 Management fee income 35,597 31,184 Interest income less withholding tax 396, , , ,068 An analysis of the Group s turnover and profit attributable to shareholders by type of projects is as follows: (i) HK$ 000 HK$ 000 Turnover Conventional property projects 313, ,671 Community housing projects 20,995 3,211 Low-cost community housing projects 172, , , ,068 (ii) Profit attributable to shareholders Conventional property projects 51,194 54,727 Community housing projects 43,272 7,814 Low-cost community housing projects 164, ,071 Land improvement projects 7, , ,612 Corporate expenses (95,780) (125,664) 171, ,948 77

80 New World China Land Limited 4. OPERATING PROFIT HK$ 000 HK$ 000 Operating profit is arrived at after crediting: Bank and other interest income 38,061 6,294 Gross rental income from investment properties 43,567 31,154 Dividend income from a jointly controlled entity 17,700 Gain on disposal of interests in jointly controlled entities 6,450 Gain on disposal of interests in subsidiaries 62,044 and after charging: Depreciation 8,029 6,211 Interest expense (note 5) 74,016 64,564 Auditors remuneration 3,514 1,651 Rental for leased premises 5,788 7,271 Amortisation of deferred expenditure 7,577 6,828 Outgoings in respect of investment properties 5,379 5, INTEREST EXPENSE HK$ 000 HK$ 000 Interest on bank loans 55,968 48,809 Interest on loans from fellow subsidiaries 94,265 71,402 Interest on loans from minority shareholders 8,169 12,020 Interest on short term loans 12, , ,231 Amount capitalised in properties under development and assets under construction (96,505) (67,667) 74,016 64,564 78

81 Notes to the Proforma Accounts Annual Report PENSION COSTS The Group did not establish its own retirement benefit schemes for directors, senior management or employees in Hong Kong. They are instead covered under a group defined contribution scheme maintained by the ultimate holding company. Proforma adjustments have been made to the combined results of the Group to reflect the relevant portion of contributions made by the Group to this defined contribution scheme. These contributions are based on a percentage of the employee s salaries ranging from 5% to 10%, depending upon the length of service of the employees. Subsequent to the balance sheet date, the Company established its own retirement benefit scheme which is available to all the Company s employees in Hong Kong. The assets of the scheme are held separately from those of the Group in an independently administered fund. The Group s contributions to the scheme are based on rates ranging from 5% to 15% of employees salaries depending on length of service and are expensed as incurred. 7. DIRECTORS AND SENIOR MANAGEMENT REMUNERATION The following disclosure of directors and senior management remuneration have been prepared based on the proforma adjustments to reflect the administrative and management expenses that would have been incurred by the Group during the two years ended 30 June (i) Details of the directors emoluments are as follows: HK$ 000 HK$ 000 Fees Salaries, discretionary bonus and other allowances 3,973 5,281 Contribution to retirement benefit scheme ,136 5,426 The emoluments of the directors fall within the following bands: Number of individuals Nil HK$500, HK$500,001 HK$1,000,000 1 HK$1,000,001 HK$1,500, HK$1,500,001 HK$2,000, No emoluments were paid to independent non-executive directors during the year (1998: Nil). 79

82 New World China Land Limited 7. DIRECTORS AND SENIOR MANAGEMENT REMUNERATION (Continued) (ii) Details of the emoluments paid to the five highest paid individuals in the Group are as follows: HK$ 000 HK$ 000 Salaries, discretionary bonus and other allowances 8,152 8,060 Contribution to retirement benefit scheme ,666 8,401 Number of directors included in the five highest paid individuals 2 3 (iii) The emoluments of the five individuals fall within the following bands: Number of individuals HK$1,000,001 HK$1,500, HK$1,500,001 HK$2,000, HK$2,000,001 HK$2,500, TAXATION HK$ 000 HK$ 000 Company and subsidiaries Hong Kong profits tax over provided in prior years (9) Jointly controlled entities PRC income tax 15,860 38,191 PRC land appreciation tax 1,502 17,353 38,191 No provision for Hong Kong profits tax has been made within the Group as the Group has no assessable profits in Hong Kong for the year (1998: Nil). 80

83 Notes to the Proforma Accounts Annual Report TAXATION (Continued) The Group s jointly controlled entities established in the PRC are required under the Foreign Investment Enterprises and Foreign Enterprise Income Tax Law to pay income tax at the rate of 33% (1998: 33%). Under the Provisional Regulations on Land Appreciation Tax ( LAT ) implemented upon the issuance of the Provisional Regulations of the PRC on 27 January 1995, all gains arising from transfer of real estate property in the PRC effective from 1 January 1994 are subject to LAT at progressive rates of up to 60%. Notwithstanding these provisions an exemption to LAT for a period of five years is applicable for property development contracts which were signed before 1 January This exemption to LAT expired on 31 December Subsequent to the balance sheet date, a deed of tax indemnity was entered into between the ultimate holding company and the Group whereby the ultimate holding company undertakes to indemnify the Group in respect of, inter alia, certain PRC income tax and LAT payable in consequence of the disposal of the Group s properties (note 25(a)). The revaluation of investment properties and other properties does not constitute a timing difference for deferred taxation purposes as there is no current intention to dispose of the properties in the foreseeable future. There are no material unprovided timing differences at the balance sheet date. 9. EARNINGS PER SHARE The calculation of proforma basic earnings per share is based on the proforma profit attributable to shareholders of HK$171,068,000 (1998: HK$189,948,000) and the proforma weighted average of 1,313,772,938 shares (1998: 1,313,772,938 shares) in issue during the year as if the Reorganisation mentioned in note 1 had been effective throughout both years. The proforma fully diluted earnings per share, calculated on the basis that the 1,463,772,938 shares in issue immediately after the public listing of the Company on 16 July 1999, has been in issue throughout both years and the estimated net proceeds from the issue of 150,000,000 shares had been placed on deposit at a rate of 4.5% per annum was 15.6 cents (1998: 16.8 cents). 81

84 New World China Land Limited 10. FIXED ASSETS Furniture, Investment Other Leasehold fixtures and Motor under properties properties improvements equipment vehicles construction Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 Cost or valuation At ,420,982 19,562 8,242 19,581 10, ,439 1,893,058 Additions 29, ,401 1, , ,381 Disposals (1,449 ) (240 ) (984 ) (2,673 ) Revaluation deficit (132,755 ) (132,755 ) Assets At ,317,326 18,113 8,274 23,742 11, ,417 1,948,011 Accumulated depreciation At ,434 1,527 6,672 4,494 14,127 Charge for the year ,550 1,894 8,029 Disposals (65 ) (174 ) (681 ) (920 ) At ,127 2,354 11,048 5,707 21,236 Net book value At ,317,326 15,986 5,920 12,694 5, ,417 1,926,775 At ,420,982 18,128 6,715 12,909 5, ,439 1,878,931 Included in assets under construction is interest capitalised of HK$4,351,000 (1998: HK$2,566,000). 82

85 Notes to the Proforma Accounts Annual Report FIXED ASSETS (Continued) Notes: (i) Investment properties were revalued on 30 June 1999 on an open market value basis by Chesterton Petty Limited, independent professional valuers, and are held in the PRC under the following leases: HK$ 000 HK$ 000 Long leases 133, ,251 Medium term leases 1,183,681 1,293,731 1,317,326 1,420,982 (ii) Other properties are stated at cost and held in the PRC under the following leases: HK$ 000 HK$ 000 Long leases 2,856 4,305 Medium term leases 15,257 15,257 18,113 19,562 (iii) Certain interest in an investment property pledged as securities for short term loans (note 16(iii)) and bank loans (note 19(i)(a)) amounted to HK$150,058,000 (1998: HK$56,896,000). 11. PROPERTIES UNDER DEVELOPMENT HK$ 000 HK$ 000 Leasehold land, at cost Long term 1,626, ,036 Medium term 659, ,059 Development and incidental costs 759,796 1,009,435 Interest capitalised 140, ,499 3,185,966 2,233,029 The aggregate carrying value of properties under development pledged as securities for short term loans (note 16 (iii)) amounted to HK$219,958,000 (1998: Nil). 83

86 New World China Land Limited 12. DEFERRED EXPENDITURE HK$ 000 HK$ 000 Pre-operating expenses 14,160 13,319 Loan procurement expenses 26,765 26,669 40,925 39,988 Accumulated amortisation (20,202) (12,625) 20,723 27, ASSOCIATED COMPANIES HK$ 000 HK$ 000 Group s share of net assets/(liabilities) 32,334 (74,827) Amounts due by associated companies Interest bearing (note (i)) 243,754 Non-interest bearing (note (ii)) 1,138, ,039 Amounts due to associated companies (note (ii)) (22,970) (10,842) 1,148,341 1,157,124 Notes: (i) The amount receivable was unsecured, carried interest at 10% per annum and had no specific repayment terms. (ii) The amounts receivable and payable are unsecured, interest free and have no specific repayment terms. (iii) Details of principal associated companies are given in note

87 Notes to the Proforma Accounts Annual Report JOINT VENTURES HK$ 000 HK$ 000 Jointly controlled entities Equity joint ventures Group s share of net liabilities (129,027) (51,692) Amounts due by joint ventures Interest bearing (note (i)) 598, ,594 Non-interest bearing (note (ii)) 2,765 91, , ,608 Co-operative joint ventures Cost of investments (note (iii)) 2,637,826 1,798,161 Share of undistributed post-acquisition results 65, ,924 2,703,031 2,091,085 Amounts due by joint ventures Interest bearing (note (iv)) 5,466,962 5,545,535 Non-interest bearing (note (ii)) 522, ,338 Amounts due to joint ventures (note (ii)) (2,823) (20,234) 8,689,338 8,018,724 Other joint ventures Group s share of net assets 49,956 8,785 Amounts due by joint ventures Interest bearing (note (v)) 167, ,660 Non-interest bearing (note (ii)) 245, , , ,453 Deposits for proposed joint ventures (note (vi)) 162,705 1,096,744 9,786,735 9,924,529 Fixed return joint ventures Cost of investments 577, ,625 Amounts due by joint ventures Interest bearing (note (vii)) 2,030,391 1,717,208 Non-interest bearing (note (ii)) 28,724 52,489 2,636,149 2,186,322 12,422,884 12,110,851 85

88 New World China Land Limited 14. JOINT VENTURES (Continued) Notes: (i) The amounts receivable are unsecured, carry interest ranging from 10% to 12% per annum (1998: 10% to 12% per annum) and have repayment terms as specified in the joint venture contracts. (ii) The amounts receivable and payable are unsecured, interest free and have repayment terms as specified in the joint venture contracts. (iii) The Group s interest in a jointly controlled entity has been pledged as part of the security to secure syndicated bank loan of US$40 million (1998: US$40 million) granted to the jointly controlled entity of which HK$232.7 million had been utilised as at 30 June 1999 (1998: HK$309.2 million). (iv) The amounts receivable are unsecured, carry interest ranging from 8.5% to 12% per annum (1998: 8.5% to 12% per annum) and have repayment terms as specified in the joint venture contracts. (v) The amounts receivable are unsecured, carry interest ranging from 4% to 1.5% above prime rate per annum (1998: 4% to 1% above prime rate per annum) and have repayment terms as specified in the joint venture contracts. (vi) The balances represent payments on account of proposed joint ventures for which only preliminary agreements have been signed and the joint venture companies have not been established as at the balance sheet date. Upon the establishment of the relevant joint venture companies, the relevant amounts will be reclassified to respective joint venture balances. (vii) The amounts receivable are unsecured, carry interest at 10% per annum (1998: 10% per annum) and have repayment terms as specified in the joint venture contracts. (viii) Details of principal joint ventures are given in note 27. (ix) A summary of the financial information of the significant jointly controlled entities is set out in note LONG TERM RECEIVABLE On 3 May 1997, the Group entered into an agreement to dispose of its entire interest in a jointly controlled entity to one of the PRC joint venturers for a total consideration of US$15,614,000. Pursuant to the terms of the agreement, the consideration was partially settled with the outstanding balance of US$7.5 million wholly payable on 31 December This amount was included as long term receivable and carried interest at 10% per annum effective from 1 January As part of the Reorganisation and pursuant to a deed of assignment between the Group and NWD, the amount was transferred to NWD at cost. 86

89 Notes to the Proforma Accounts Annual Report NET CURRENT ASSETS/(LIABILITIES) HK$ 000 HK$ 000 Current assets Debtors, deposits and other receivables (note (i)) 71, ,278 Properties under development (note (ii)) 760,709 Amount due from ultimate holding company 311,785 Amounts due from minority shareholders 67,856 Cash and bank balances 383, ,633 1,595, ,911 Current liabilities Creditors and accruals 131, ,080 Deposits received on sale of properties 50,538 1,559 Amounts due to fellow subsidiaries 38,857 6,728 Short term loans Secured (note (iii)) 375,461 18,692 Unsecured 18, ,700 Current portion of long term liabilities (note 19(i)) 372,384 Taxes payable (note (iv)) 220, ,493 1,207,725 1,025, ,026 (348,341) Notes: (i) (ii) As part of the Reorganisation and pursuant to a deed of assignment entered into between the Group and NWD, a debt amounting to HK$142,500,000 owed to the Group by a third party, was transferred to NWD at a consideration equal to the debt amount. Properties under development are analysed as follows: HK$ 000 HK$ 000 Medium term leasehold land, at cost 84,166 Development and incidental costs 567,503 Interest capitalised 109, ,709 87

90 New World China Land Limited 16. NET CURRENT ASSETS/(LIABILITIES) (Continued) (iii) Secured short term loans HK$296,261,000 (1998: Nil) of the short term loans is secured by the Group s certain interest in a property under development (note 11), bears interest at 7.11% per annum and is wholly repayable on 8 December HK$51,402,000 (1998: HK$18,692,000) of the short term loans is secured by the Group s certain interest in an investment property (note 10(iii)), bears interest at 0.53% per month (1998: 0.72% to 0.84% per month) and is wholly repayable on 20 January HK$27,798,000 (1998: Nil) of the short term loans is secured by a property owned by a minority shareholder, bears interest at 0.59% per month and is repayable on 12 January (iv) Taxes payable HK$ 000 HK$ 000 Income and business taxes payable Withholding tax payable 220, , , , SHARE CAPITAL HK$ US$ Authorised: 8,000,000,000 shares of HK$0.1 each 800,000,000 (1998: 50,000 shares of US$1 each) 50,000 Issued and fully paid: 3 shares of HK$0.1 each (1998: 3 shares of US$1 each) 3 As at the date of its incorporation, the Company s initial authorised share capital was US$50,000 divided into 50,000 shares of US$1 each of which two subscriber shares of US$1 each were issued. These subscriber shares were subsequently transferred to NWCF on 7 October On 4 November 1997, one share of US$1 was issued at par to NWCF. On 29 June 1999, the authorised share capital of the Company was increased by HK$800,000,000 through the creation of 8,000,000,000 shares of HK$0.1 each. Three shares were allotted and issued to NWCF and the Company repurchased from NWCF the three existing issued shares of US$1 each held by NWCF. Subsequent thereto, the Company cancelled its initial authorised but unissued share capital of US$50,

91 Notes to the Proforma Accounts Annual Report SHARE CAPITAL (Continued) On 15 July 1999, 999,999,997 shares of HK$0.1 each were issued and allotted to NWD by means of capitalisation of the debts due to NWD (note 1(a)). In addition, 313,772,938 shares of HK$0.1 each were issued for conversion of the Bonds (note 1(b)) and 150,000,000 shares of HK$0.1 each were issued pursuant to the initial public offer at HK$9.5 each. Had the Reorganisation taken place on 30 June 1999, the paid up share capital of the Company at that date would have been HK$131,377, RESERVES Investment properties Hotel properties Contributed revaluation revaluation Exchange Retained surplus reserve reserve reserve profit Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 As at ,795, ,208 1,453 22, ,056 14,696,314 Reserve arising from the Reorganisation 956, ,619 Profit retained for the year 171, ,068 Proforma adjustments in respect of administrative and management expenses for the year 38,028 38,028 Revaluation (deficit)/surplus Company and subsidiaries (85,900 ) (85,900 ) Associated companies 62, ,102 Jointly controlled entities 53,755 3,718 57,473 Translation difference 11,398 11,398 As at ,751, ,009 5,327 33, ,152 15,908,102 Retained by: Company and subsidiaries 14,751,973 42,393 (1,993 ) 1,227,352 16,019,725 Associated companies 62, ,002 (43,168 ) 26,936 Jointly controlled entities 231,670 5,171 28,632 (404,032 ) (138,559 ) 14,751, ,009 5,327 33, ,152 15,908,102 Had the Reorganisation taken place on 30 June 1999, the reserves of the Company at that date would have been HK$14,751,973,000, representing the contributed surplus arising from the Reorganisation. Under the Companies Law in the Cayman Islands, the contributed surplus is distributable. Accordingly, proforma distributable reserves of the Company amounted to HK$14,751,973,000 as at 30 June

92 New World China Land Limited 19. LONG TERM LIABILITIES HK$ 000 HK$ 000 Bank and other borrowings (note (i)) 2,501,237 1,803,062 Deferred income 421, ,738 2,922,689 2,115,800 (i) Bank and other borrowings HK$ 000 HK$ 000 Bank loans (note (a)) Secured 28,037 Unsecured 744,768 Loans from fellow subsidiaries (note 23 (i)(c)) 1,161, ,256 Loans from minority shareholders (note (b)) 939, ,106 Other loans 17,700 2,873,621 1,803,062 Current portion included in current liabilities (note 16) (372,384) 2,501,237 1,803,062 Notes: (a) The bank loans are repayable as follows: Secured Unsecured bank loan bank loan Total HK$ 000 HK$ 000 HK$ 000 Within one year 372, ,384 Between one and two years 372, ,384 Between two and five years 28,037 28,037 28, , ,805 The secured bank loan is secured by the Group s certain interest in an investment property of the Group (note 10(iii)), bears interest at 0.59% per month and is wholly repayable in August The unsecured bank loan bears interest at 1% above LIBOR per annum and is repayable by five equal instalments up to 11 June (b) Except for loans of HK$61,767,000 (1998: HK$56,470,000), which are unsecured, bear interest ranging from 10% to 15% per annum (1998: 10% to 15% per annum) and have repayment terms as specified in the joint venture contracts, the remaining balance is unsecured, interest free and has no specific repayment terms.

93 Notes to the Proforma Accounts Annual Report CONTINGENT LIABILITIES (i) The Group has contingent liabilities relating to counter-guarantees given to NWD of approximately HK$223,629,000 (1998: HK$23,302,000) in respect of the bank loan facilities extended to an associated company and a jointly controlled entity of the Group in respect of which NWD has given guarantees. (ii) The Group has contingent liabilities relating to counter-guarantees given to NWD of approximately HK$186,916,000 (1998: Nil) in respect of bank loan facilities extended to a fixed return joint venture of the Group in respect of which NWD has given guarantees. 21. COMMITMENTS (i) Capital expenditure commitments (a) The capital expenditure commitments of the Group were as follows: HK$ 000 HK$ 000 Contracted but not provided for Fixed assets 95, Investments in jointly controlled entities 1,272,199 1,054,126 Investments in fixed return joint ventures 122, ,849 1,490,335 1,187,366 Authorised but not contracted for 1,490,335 1,187,366 (b) The Group has entered into preliminary joint venture contracts in respect of which the joint venture companies have not yet been established as at 30 June There is no outstanding capital commitments of the Group payable upon the establishment of these joint venture companies as at 30 June 1999 (1998: HK$158,450,000). (c) The Group did not have any share of capital commitments of the jointly controlled entities themselves not included in (a) above (1998: Nil). 91

94 New World China Land Limited 21. COMMITMENTS (Continued) (ii) Lease commitments HK$ 000 HK$ 000 Annual commitments payable in following year in respect of land and building expiring in The first year The second to fifth years 4, , (iii) Other commitments As at 30 June 1999, the Group had issued performance guarantees amounting to approximately HK$56,075,000 (1998: HK$56,075,000), of which HK$31,072,000 (1998: HK$21,033,000) was utilised, in respect of mortgage facilities granted by certain banks relating to the mortgage loans arranged for certain purchasers of a property project developed by a jointly controlled entity of the Group. Pursuant to the terms of the performance guarantees, upon default in mortgage payments by these purchasers, the Group is responsible to repay the outstanding mortgage principals together with accrued interest owed by the defaulted purchasers to the banks and the Group is entitled to take over the legal title and possession of the related properties. 92

95 Notes to the Proforma Accounts Annual Report NOTES TO PROFORMA COMBINED CASH FLOW STATEMENT (a) Reconciliation of operating profit to net cash outflow from operating activities HK$ 000 HK$ 000 Operating profit 464, ,405 Proforma adjustments 38,028 44,917 Interest and dividend income (452,475) (264,875) Interest expense 74,016 64,564 Depreciation 8,029 6,211 Amortisation of deferred expenditure 7,577 6,828 Gain on disposal of interests in subsidiaries (62,044) Gain on disposal of interests in jointly controlled entities (6,450) Exchange differences Increase in properties under development (963,218) (1,032,229) Decrease/(increase) in debtors, deposits and other receivables 39,491 (148,415) Increase in amounts due from minority shareholders (67,856) Increase in amounts due to fellow subsidiaries 32,129 2,172 Increase in deposits received on sale of properties 48,979 1,559 (Decrease)/increase in creditors and accruals (44,762) 55,972 Net cash outflow from operating activities (882,838) (1,060,904) (b) Disposal of interests in subsidiaries 1999 HK$ 000 Net assets disposed Investment in associated company 179,479 Investment in jointly controlled entities 183,775 Gain on disposal of interests in subsidiaries 62,044 Consideration 425,298 Satisfied by: Cash 61,798 Amount due from ultimate holding company 363, ,298 93

96 New World China Land Limited 22. NOTES TO PROFORMA COMBINED CASH FLOW STATEMENT (Continued) (c) Analysis of changes in financing during the year Amount due Long term bank Share capital and from ultimate Short term and other Minority contributed surplus holding company loans borrowings interests Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 Balance at ,926, ,392 1,803, ,862 16,618,047 Net cash inflows from financing 1,112, , ,693 8,646 1,829,530 Conversion of revolving loan facility to long term bank loan (695,700) 695,700 Capitalisation of amount owing to NWD 956,619 (956,619 ) Minority interests share of losses and reserves (51,961) (51,961) Accrual of interest payable 42,166 42,166 Assignment of debts (note 15) (58,396 ) (58,396) Proceeds from disposal of interests in subsidiaries (note (b)) (363,500 ) (363,500) Proceeds from disposal of interests in jointly controlled entities (46,000 ) (46,000) Balance at ,883,350 (311,785 ) 394,153 2,873, ,547 17,969,886 94

97 Notes to the Proforma Accounts Annual Report RELATED PARTY TRANSACTIONS The following is a summary of significant related party transactions during the year carried out by the Group in the normal course of its business: (i) Note HK$ 000 HK$ 000 Estate management fee paid to a fellow subsidiary (a) Estate agency commission paid to a fellow subsidiary (b) Interest on loans from fellow subsidiaries (c) 94,265 71,402 Rental for leased premises (d) 5,308 6,871 Guarantee fee paid to ultimate holding company (e) 17,008 13,918 Guarantee fee paid to a fellow subsidiary (f ) 1,595 Estate management fee income from a fellow subsidiary (g) 1, Rental income from a jointly controlled entity of a fellow subsidiary (h) Interest income from associated companies and jointly controlled entities (i) 252,520 88,143 Management fee income from jointly controlled entities (j) 35,597 31,184 Notes: (a) Kiu Lok Property Management (China) Limited ( KLPM ), a fellow subsidiary, has been appointed by Wuhan New Eagle Development Company Limited ( WNED ), a 95% owned subsidiary, as property manager providing estate management services for an investment property of the Group located in Wuhan, for a term of 10 years commencing from 1 September In return, an estate management fee is payable to KLPM which is calculated on the basis of 15% on actual expenses to be incurred by KLPM in the provision of its services. With effect from 1 August 1998, pursuant to the term of a supplementary agreement, the estate management fee is charged at a fixed amount of HK$25,000 per month thereafter up to 31 August 1999 when the basis of charging estate management fee will be negotiated. (b) KLPM has been appointed as the sole leasing agent for WNED in return for an agency commission which is calculated on the basis of one month s rental income in respect of each tenancy entered or 80% on the monthly average rental income for those tenancies with term of rent-free period granted to the tenants. 95

98 New World China Land Limited 23. RELATED PARTY TRANSACTIONS (Continued) (i) (c) (1) New World Finance Company Limited ( NWF ), a fellow subsidiary, has entered into various loan agreements with the following subsidiaries. The loans are unsecured, terms of which are as follows: Outstanding loan amount Repayment Subsidiary as at 30 June 1999 Term of interest terms Shanghai Heyu Properties Co., Ltd HK$315,704,000 15% per annum Wholly repayable (1998: HK$289,947,000) on Shanghai Ju Yi Real Estate Development Co., Ltd. HK$364,380,000 12% per annum 3 or 6 years from (1998: HK$305,655,000) date of drawdown Shanghai Ramada Plaza Ltd. HK$169,782,000 15% per annum Wholly repayable (1998: HK$100,987,000) on (2) Sexon Enterprises Limited, a fellow subsidiary, has entered into a loan agreement with Billion Huge (International) Limited, a wholly owned subsidiary of the Group. The amount outstanding under the agreement as at 30 June 1999 was approximately HK$221.7 million (1998: HK$109.7 million). The loan is unsecured, bears interest at 10% per annum (1998: 10% per annum) and has no specific repayment terms. (3) Hip Hing Construction Company Limited, a fellow subsidiary, has entered into a loan agreement with NWDC, a wholly owned subsidiary of the Group, whereby a loan of HK$90,000,000 (1998: Nil) was granted to NWDC. The loan is unsecured, bears interest at 8.5% per annum and is wholly repayable in June (d) This represents rental for office premises occupied by the Group. The amounts had been paid by NWD to New World Tower Company Limited, a fellow subsidiary. For the purpose of this accounts, proforma adjustments have been made to the combined results of the Group to reflect the relevant portion of rental expense shared by the Group which is calculated by reference to the floor area of the office premises occupied by the Group during the year. (e) In consideration of the guarantee furnished by NWD in respect of US$300 million (1998: US$300 million) syndicated loan facility granted to NW China Homeowner Development Limited ( NWCHD ), a wholly owned subsidiary, a guarantee fee is payable by NWCHD to NWD. The guarantee fee is calculated at 2% per annum (1998: 2% per annum) on the average daily amount outstanding under such facility during a financial year and payable annually in arrears within thirty business days of the expiry of the relevant financial year. (f ) In consideration of the guarantee furnished by New World Insurance Company (L) Limited ( NW Insurance ), a fellow subsidiary, in respect of the Return on Costs, a guarantee fee of 2% of the Return on Costs is payable by NWCHD to NW Insurance. The guarantee fee is payable within thirty business days of the end of the calendar month during which the relevant subsidiary of NWCHD properly records the Return on Costs in its books. (g) This represents estate management fees paid to the Group from New World Department Store Tianjin Limited ( NWDST ), a fellow subsidiary which owns certain floor of a property of which the remaining floors are owned by the Group. The Group undertakes the estate management services for the whole property and an estate management fee is charged to NWDST at RMB12 per sq.m. from 1 November 1997 and at RMB18 per sq.m. from 1 November 1998 thereafter. (h) Tianjin Xinzhan Expressway Company Limited, a jointly controlled entity of a fellow subsidiary, has entered into a lease agreement with New World Anderson (Tianjin) Development Co., Ltd., a 51% owned subsidiary, to lease 412 sq. m. of an investment property of the Group for a period of three years commencing from 1 June 1998 at a monthly rental of RMB53,

99 Notes to the Proforma Accounts Annual Report RELATED PARTY TRANSACTIONS (Continued) (i) (i) This represents interest income in respect of loans financing provided to associated companies and jointly controlled entities. These loans are unsecured, carry interest at fixed rates ranging from 4% to 12% per annum (1998: 4% to 12% per annum) and have repayment terms as specified in the relevant joint venture or shareholders agreements. (j) This represents management fee income in respect of management and consultancy services rendered by certain subsidiaries of the Group to various jointly controlled entities. These management fees are charged at fixed amounts as specified in the relevant joint venture contracts. (ii) Polytown Projects Limited, a fellow subsidiary, has been appointed by Dalian New World Plaza International Co., Ltd ( DNWP ), a 88% owned subsidiary, to provide project management services for construction of a property investment project located in Dalian ( the Property ). The project management fee in respect of its services rendered amounting to approximately HK$9.8 million had been incurred as at 30 June 1999 (1998: HK$8.7 million) and was included as part of the development costs of the Property. (iii) Hip Hing Construction (China) Company Limited ( HHCC ), a fellow subsidiary, has been appointed by DNWP as main contractor for the construction of the Property including foundation and superstructure works. The total contract sum was agreed at US$54,640,000 of which approximately HK$130.8 million had been incurred as at 30 June 1999 (1998: HK$93.1 million) and was included as part of the development costs of the Property. (iv) Meprom Limited, a fellow subsidiary, has been appointed by DNWP as electrical engineer to provide engineering consultancy for the construction of the Property. The engineering consultancy fees in respect of the services rendered was agreed at fixed contract sum and approximately HK$2.4 million had been incurred as at 30 June 1999 (1998: HK$1 million) and was included as part of the development costs of the Property. (v) Reliance China Limited, a former fellow subsidiary, has been appointed as the project management consultant in respect of two property development projects located in Shanghai. The project management fees was agreed at fixed contract sums and approximately HK$48.9 million had been incurred as at 30 June 1999 (1998: HK$35.7 million) and was included as part of the development costs of these projects. (vi) Certain subsidiaries in the PRC have entered into various contracts with the PRC partners for site clearance, demolition, and resettlement of existing tenants from the sites of the property development projects on the basis of fixed contract sums with overrun costs being wholly borne by the respective PRC partners. The aggregate contract sums under these contracts amounted to approximately HK$157.3 million (1998: HK$157.3 million) of which approximately HK$101.9 million (1998: HK$80 million) had been incurred as at 30 June

100 New World China Land Limited 23. RELATED PARTY TRANSACTIONS (Continued) The following is a summary of other significant related party transactions during the year carried out by associated companies and jointly controlled entities of the Group in the normal course of their business: (i) Certain associated companies of the Group have entered into loan agreements with NWF. The terms of which are as follows: Associated company Loan amount Term of interest Repayment terms Beijing Niceline Real Estates US$5,550,000 15% per annum Wholly repayable Development Co., Ltd. within five years from the date Beijing Fu Wah Real Estates US$5,550,000 15% per annum of the loan Development Co., Ltd. agreements or at the end of Beijing Chang Le Real Estates US$8,130,000 15% per annum the construction Development Co., Ltd. period of the respective property Beijing Po Garden Real Estates US$8,130,000 15% per annum development Development Co., Ltd. projects, whichever is the earlier Shanghai New World Huai Hai Property US$25,370,000 15% per annum Wholly repayable Development Co., Ltd. on (ii) Tridant Engineering Company Limited ( Tridant ), a fellow subsidiary, has been appointed by jointly controlled entities of the Group to carry out electrical engineering work for property development and investment projects located in Beijing and Shunde. The fees paid to Tridant in respect of its services rendered was agreed at fixed contract sums and amounted to approximately HK$243.6 million as at 30 June 1999 (1998: million). (iii) Young s Engineering Company Limited ( Young s ), a fellow subsidiary, has been appointed by jointly controlled entities of the Group to carry out air-conditioning engineering work for property development and investment projects located in Beijing and Shunde. The fees paid to Young s in respect of its services rendered was agreed at fixed contract sums and amounted to approximately HK$159.3 million as at 30 June 1999 (1998: HK$144.4 million). (iv) Beijing Hip Hing Construction and Engineering Co., Ltd ( BHH ), a jointly controlled entity of a fellow subsidiary, has been appointed by a jointly controlled entity of the Group to carry out construction work for a property development and investment project located in Beijing. The fees paid to BHH in respect of its services rendered was agreed at fixed contract sum and amounted to approximately HK$354.1 million as at 30 June 1999 (1998: HK$354.1 million). (v) Beijing Kiu Lok Property Management Services Co., Ltd ( Beijing Kiu Lok ), a jointly controlled entity of a fellow subsidiary, has been appointed by jointly controlled entities of the Group to provide property management services for an investment property located in Beijing. The fees paid to Beijing Kiu Lok in respect of its services rendered was agreed at US$3.5 to US$4.1 per sq. m. and approximately HK$14.3 million was paid during the year (1998: Nil). (vi) Certain associated companies and jointly controlled entities in the PRC have entered into various contracts with the PRC partners for site clearance, demolition, and resettlement of existing tenants from the sites of the property development projects on the basis of fixed contract sums with overrun costs being wholly borne by the respective PRC partners. The aggregate contract sums under these contracts amounted to approximately HK$2,640 million (1998: HK$2,612.3 million) of which approximately HK$2,438.1 million had been incurred as at 30 June 1999 (1998: HK$2,332.4 million). 98

101 Notes to the Proforma Accounts Annual Report SIGNIFICANT JOINTLY CONTROLLED ENTITIES Set out below is a summary of the financial information of three significant jointly controlled entities whose principal activities are the investment in a property development project in Beijing. (1) Beijing Chong Wen New World Properties Development Co., Ltd. (a) Results for the year HK$ 000 HK$ 000 Turnover 15, ,519 Operating (loss)/profit (101,098) 53,185 Taxation 26,785 (Loss)/profit after taxation (101,098) 26,400 Group s share of (loss)/profit after taxation (58,806) 15,312 (b) Net assets as at year end HK$ 000 HK$ 000 Fixed assets 1,486,940 1,674,734 Other assets 1,909,184 1,863,139 Current assets 500, ,164 Current liabilities (338,801) (319,078) Long term liabilities (other than amounts due to the Group) (404,500) (515,033) 3,153,821 3,042,926 99

102 New World China Land Limited 24. SIGNIFICANT JOINTLY CONTROLLED ENTITIES (Continued) (2) Beijing Chong Yu Real Estate Development Co., Ltd. (a) Results for the year HK$ 000 HK$ 000 Turnover Operating results Group s share of operating results (b) Net assets as at year end HK$ 000 HK$ 000 Fixed assets 1,125 1,252 Other assets 1,576,627 1,024,876 Current assets 63, ,925 Current liabilities (150,039) (41,170) 1,491,540 1,136,

103 Notes to the Proforma Accounts Annual Report SIGNIFICANT JOINTLY CONTROLLED ENTITIES (Continued) (3) China New World Electronics Ltd. (a) Results for the year HK$ 000 HK$ 000 Turnover 4, ,185 Operating loss (177,287) (1,741) Group s share of operating loss (124,101) (1,219) (b) Net assets as at year end HK$ 000 HK$ 000 Fixed assets 938,247 1,028,982 Other assets 876, ,203 Current assets 139, ,239 Current liabilities (387,239) (200,596) 1,566,991 1,730,

104 New World China Land Limited 25. SUBSEQUENT EVENTS The following significant events took place subsequent to 30 June 1999: (a) On 3 July 1999, NWD entered into a deed of tax indemnity (the Tax Indemnity ) in favour of the Company against any depletion or diminution in the value of the Group s assets arising or resulting from, inter alia, PRC Land Appreciation Tax ( LAT ) and PRC Income Tax ( IT ) payable in consequence of the disposal of certain properties by the Group held as at 31 March 1999 (other than low-cost community housing) and in respect of which the aggregate amount of LAT and IT is estimated at approximately HK$7,951 million. The Tax Indemnity is also given in respect of LAT and IT payable in consequence of the disposal of any low-cost community housing in the event the relevant company in the Group is unable to pay such taxes. (b) On 16 July 1999, the shares of the Company were listed on The Stock Exchange of Hong Kong Limited. (c) On 2 October 1999, Jinnan New World Sunshine Development Co., Ltd. ( JNWSD ), an equity joint venture, was established to engage in property development projects located in Jinnan. The joint venture is for a period of 30 years and the total investment is RMB260 million which is partly financed by the registered capital of RMB80 million. The Group is committed to contribute 65 per cent. of the registered capital amounting to RMB52 million and is entitled to profit sharing of 65 per cent ULTIMATE HOLDING COMPANY The directors of the Company consider New World Development Company Limited, incorproated and listed in Hong Kong, as being the ultimate holding company. 102

105 Notes to the Proforma Accounts Annual Report PARTICULARS OF PRINCIPAL SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES Details of the principal subsidiaries, associated companies and joint ventures which materially affect the results and/or assets of the Group as at 30 June 1999 are set out below: Attributable interest held (note 1) Issued/registered and By the By the Principal Company name fully paid up share capital Company Group activities Subsidiaries Incorporated and operated in Hong Kong Billion Huge (International) Limited HK$950, % Investment 950,001 ordinary shares of HK$1 each holding Billion Park Investment Limited HK$1,000, % Investment 1,000,000 ordinary shares of HK$1 each holding China Joy International Limited HK$2 100% Investment 2 ordinary shares of HK$1 each holding Max Charm Investment Limited HK$2 100% Investment 2 ordinary shares of HK$1 each holding New World Development HK$4 100% 100% Investment (China) Limited 2 ordinary shares of HK$1 each holding 2 non-voting deferred shares of HK$1 each Trend Island Limited HK$2 100% Investment 2 ordinary shares of HK$1 each holding Incorporated in the British Virgin Islands Banyan Developments Limited US$1 100% Investment 1 share of US$1 holding Conful Enterprises Limited US$1 100% Investment 1 share of US$1 holding 103

106 New World China Land Limited 27. PARTICULARS OF PRINCIPAL SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES (Continued) Attributable interest held (note 1) Issued/registered and By the By the Principal Company name fully paid up share capital Company Group activities Subsidiaries Incorporated in the British Virgin Islands Ever Brisk Limited US$1 100% Investment 1 share of US$1 holding Hinto Developments Limited US$1 100% Investment 1 share of US$1 holding Kiwi Profits Limited US$10 100% Investment 10 shares of US$1 each holding Magic Chance Limited US$1 100% Investment 1 share of US$1 holding Radiant Glow Limited US$1 100% Investment 1 share of US$1 holding Sparkling Rainbow Limited US$1 100% Investment 1 share of US$1 holding Steady Profits Limited US$1 100% Investment 1 share of US$1 holding Sweet Prospects Enterprises Limited US$1 100% Investment 1 share of US$1 holding Team Foundation Limited US$1 100% Investment 1 share of US$1 holding True Blue Developments Limited US$1 100% Investment 1 share of US$1 holding 104

107 Notes to the Proforma Accounts Annual Report PARTICULARS OF PRINCIPAL SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES (Continued) Attributable interest held (note 1) Issued/registered and By the By the Principal Company name fully paid up share capital Company Group activities Subsidiaries Incorporated in the British Virgin Islands Twin Glory Investments Limited US$1 100% Investment 1 share of US$1 holding Incorporated in the Cayman Islands and operated in Hong Kong NW China Homeowner US$22, % Investment Development Limited 222,962 shares of US$0.01 each holding 4,999,800 shares of US$0.01 each 40% called up Incorporated and operated in the PRC Dalian New World Plaza RMB58,000,000 88% Property International Co., Ltd investment Fung Seng Real Estate Development US$10,000,000 80% Property (Shanghai) Co., Ltd. development!"#$%&'()* HK$136,000, % Property development Nanjing Huawei Real Estate US$12,000,000 48% Property Development Co., Ltd. development New World Anderson (Tianjin) US$10,000,000 51% Property Development Co., Ltd. investment and development New World (Shenyang) Property RMB57,840,000 90% Property Development Limited development 105

108 New World China Land Limited 27. PARTICULARS OF PRINCIPAL SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES (Continued) Attributable interest held (note 1) Issued/registered and By the By the Principal Company name fully paid up share capital Company Group activities Subsidiaries Incorporated and operated in the PRC New World (Shenyang) Property RMB57,840,000 90% Property Development No. 2 Limited development New World (Shenyang) Property RMB57,840,000 90% Property Development No. 3 Limited development New World (Shenyang) Property RMB57,840,000 90% Property Development No. 4 Limited development New World (Shenyang) Property RMB57,840,000 90% Property Development No. 5 Limited development New World (Shenyang) Property RMB33,200,000 90% Property Development No. 6 Limited development Shanghai Ramada Plaza Ltd. US$17,000,000 57% Property development Shanghai Heyu Properties Co., Ltd. US$12,000,000 64% Property development Shanghai Ju Yi Real Estate RMB128,000,000 80% Property Development Co., Ltd. development Shenzhen Top One Real Estate HK$60,000,000 70% Property Development Co., Ltd development Wuhan New Eagle Development US$10,000,000 95% Property Company Limited investment 106

109 Notes to the Proforma Accounts Annual Report PARTICULARS OF PRINCIPAL SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES (Continued) Attributable interest held (note 1) Issued/registered and By the By the Principal Company name fully paid up share capital Company Group activities Associated companies Incorporated and operated in Hong Kong Global Perfect Development Limited HK$1,000,000 50% Investment 1,000,000 ordinary shares of HK$1 each holding Niceline Company Limited HK$1, % Investment 1,000 ordinary shares of HK$1 each holding Sun City Holdings Limited HK$8,000, % Investment 8,000,000 ordinary shares of HK$1 each holding Wing Shan International Country HK$1,000, % Investment Club Co. Limited 1,000,000 ordinary shares of HK$1 each holding Incorporated in the British Virgin Islands Grand Make International Limited US$100 45% Investment 100 shares of US$1 each holding Sinclair Profits Limited US$10 35% Investment 10 shares of US$1 each holding Fortune Star Limited US$100 40% Investment 100 shares of US$1 each holding Incorporated and operated in the PRC Beijing Chang Le Real Estates US$12,000, % Property Development Co., Ltd. development Beijing Fu Wah Real Estates US$8,000, % Property Development Co., Ltd development 107

110 New World China Land Limited 27. PARTICULARS OF PRINCIPAL SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES (Continued) Attributable interest held (note 1) Issued/registered and By the By the Principal Company name fully paid up share capital Company Group activities Associated companies Incorporated and operated in the PRC Beijing Niceline Real Estates US$8,000, % Property Development Co., Ltd development Beijing Po Garden Real Estates US$12,000, % Property Development Co., Ltd development Foshan Country Club Co., Ltd. US$52,924, % Golf club operation Foshan Country Club Real Estate US$12,000, % Property Development Limited development Shanghai New World Huai Hai US$70,000, % Property Property Development Co., Ltd. development Jointly controlled entities Incorporated and operated in Hong Kong Golden World Enterprises HK$10,000 30% Investment (Wuhan) Limited 10,000 ordinary shares of HK$1 each holding Maxfine Development Limited HK$9, % Investment 9,150 ordinary shares of HK$1 each holding New World Sun City Limited HK$1, % Investment 1,000 ordinary shares of HK$1 each holding Incorporated in the British Virgin Islands 108 Concord Properties Holding US$10 40% Investment (Guangzhou) Limited 10 shares of US$1 each holding

111 Notes to the Proforma Accounts Annual Report PARTICULARS OF PRINCIPAL SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES (Continued) Attributable interest held (note 1) Issued/registered and By the By the Principal Company name fully paid up share capital Company Group activities Jointly controlled entities Incorporated and operated in the PRC Beijing Chong Wen-New World US$104,000,000 58% - 70% Property Properties Development Co., Ltd investment and development Beijing Chong Yu Real Estate US$81,840,000 60% Property Development Co., Ltd. investment and development Beijing Xin Lian Hotel Co., Ltd. US$12,000,000 59% Hotel operation China New World Electronics Ltd. US$20,000,000 70% Property investment and development Dongguan New World Garden Trade US$12,000,000 38% Property Construction Co., Ltd. development Dongguan New World Square US$12,000,000 38% Property Trade Construction Co., Ltd development Guangzhou Cosmart Estate HK$48,000,000 60% Property Development Limited development!"#$%&'()* US$12,000,000 70% Property development!"#$%&'( RMB80,000,000 60% Investment holding 109

112 New World China Land Limited 27. PARTICULARS OF PRINCIPAL SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES (Continued) Attributable interest held (note 1) Issued/registered and By the By the Principal Company name fully paid up share capital Company Group activities Jointly controlled entities Incorporated and operated in the PRC!"#$%&'( RMB780,000,000 60% Property!"# development!"#$%&'() HK$80,000,000 60% Property development!"#$%&'() RMB200,000,000 45% Property development!"#$%&'() RMB244,000,000 90% Property development Shanghai Jianmei Property US$10,000,000 30% Property Development Co., Ltd. development Shanghai Trio Property US$75,000, % Property Development Co., Ltd. development Shenyang New World RMB68,000,000 70% Hotel Lumingchun Building Co., Ltd. operation Shenzhen Topping Real Estate HK$88,000,000 70% Property Development Co., Ltd. development Shijiazhuang New World RMB88,000,000 55% Property Industry Co., Ltd. investment Tianjin New World Properties US$12,000,000 70% Property Development Co., Ltd. redevelopment Wuhan Taibei & New World US$14,160,000 50% Hotel Hotel Co., Ltd. operation 110

113 Notes to the Proforma Accounts Annual Report PARTICULARS OF PRINCIPAL SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES (Continued) Attributable interest held (note 1) Issued/registered and By the By the Principal Company name fully paid up share capital Company Group activities Jointly controlled entities Incorporated and operated in the PRC!"#$%& RMB15,000,000 40% Land development Wuhan Xinhan Development RMB30,000,000 50% Property Co., Ltd. development Fixed return joint ventures Incorporated and operated in the PRC!"#$%&'()* RMB99,600,000 note 2 Development of low-cost community housing!"#$%&'() US$24,000,000 note 2 Development of!"# low-cost community housing Huizhou New World Housing RMB80,000,000 note 2 Development of Development Limited low-cost community housing 111

114 New World China Land Limited 27. PARTICULARS OF PRINCIPAL SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES (Continued) Attributable interest held Issued/registered and By the By the Principal Company name fully paid up share capital Company Group activities Fixed return joint ventures Incorporated and operated in the PRC Tianjin New World Housing RMB80,000,000 note 2 Development of Development Co., Ltd. low-cost community housing Wuhan New World Housing RMB96,000,000 note 2 Development of Development Limited low-cost community housing Notes: 1. Represent equity interest in case of companies incorporated outside the PRC or the percentage of equity interest in case of equity joint ventures or profit sharing ratio in accordance with the joint venture contracts in case of co-operative joint ventures in the PRC. 2. The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. 28 APPROVAL OF ACCOUNTS The proforma accounts were approved by the board of directors on 15 October

115 Annual Report 1999 Financial Summary PROFORMA COMBINED RESULTS HK$ 000 HK$ 000 HK$ 000 HK$ 000 Turnover 506, , , ,915 Operating profit 464, , , ,058 Share of results of Associated companies (20,465) (22,951) (11,100) (46,011) Jointly controlled entities (259,163) 39,169 61,348 (11,032) Profit before taxation 185, , ,694 82,015 Taxation 17,353 38,191 33,873 5,049 Profit after taxation 167, , ,821 76,966 Minority interest 3,195 10,516 4,273 6,885 Profit attributable to shareholders 171, , ,094 83,

116 New World China Land Limited PROFORMA COMBINED ASSETS AND LIABILITIES HK$ 000 HK$ 000 Fixed assets 1,926,775 1,878,931 Properties under development 3,185,966 2,233,029 Deferred expenditure 20,723 27,363 Associated companies 1,148,341 1,157,124 Joint ventures 12,422,884 12,110,851 Long term receivable 58,396 Net current assets/(liabilities) 388,026 (348,341) Total assets less current liabilities 19,092,715 17,117,353 Long term liabilities Minority interests (2,922,689) (2,115,800) (130,547) (173,862) 16,039,479 14,827,691 Note: The financial summary of the Group which is provided for information only, has been prepared on the basis that the structure and business activities of the Group immediately after the completion of the Reorganisation had been in existence throughout the relevant years. 114

117 Annual Report 1999 Project Profile SUMMARY OF THE GROUP S PROJECTS PROPERTY PORTFOLIO PROJECT FORM OF TYPE OF SITE AREA TOTAL GFA NO. PROJECT NAME INVESTMENT DEVELOPMENT (sq. m.) (sq. m.) USAGE NORTHERN REGION Beijing 1. Beijing New World Centre Phase I CJV Con 17, ,623 R, O, C, Oth 2. Beijing New World Centre Phase II CJV Con 16, ,559 R, O, C 3. Beijing New World Garden CJV Mass-C 52, ,423 R, C, Oth 4. Beijing Chongwen District Lot No.5 Development Phase I CJV Mass-C 19,977 65,271 R 5. Chongwen District Development CJV Mass-C 630,972 1,627,697 R, C 6. Yanjing Building Development CJV Con 6,600 36,740 O, C, Oth 7. Daxing Warehouse CJV Con 31,707 10,506 W, O, Oth 8. Beijing Lai Loi Garden CJV Bao Yuan Con 402, ,575 R, Oth Chang Le Con 358, ,000 R, Oth Lai Loi Con 216, ,930 R, Oth Fu Hua Con 293, ,000 R, Oth 9. Beijing Boxing Plaza Note (4) Con 11,520 49,300 O, C, Oth 10. New World Courtyard, Beijing CJV Con N/A 23,988 H 11. Yizhuang Development CJV Mass-C 101, ,375 R, C, Oth Tianjin 12. Tianjin New World Anderson Centre WFE Con 23,127 91,001 O, C, Oth 13. Tianjin Xin An Garden WFE Mass-C 20, ,718 R, O, C, Oth 14. Tianjin Dahutung Development CJV Con 25, ,500 R, O, C 15. Huayuan Residential Area Development Sub area 4 and 8 CJV Mass-L 301, ,188 R 16. Xin Chun Hua Yuan Development Lot 603, Lot Bajiefang CJV Mass-L 72, ,887 R, C, Oth 17. Nanshi Development CJV Mass-C 420,209 1,549,842 R, C, Oth Shijiazhuang 18. Shijiazhuang New World Plaza EJV Con 90,602 89,615 C, H, Oth NORTHEAST REGION Shenyang 19. Shenyang New World Garden CJV Mass-C 1,959,300 3,318,180 R, C, Oth 20. Taiyuan Street Development Note (4) Con 7,293 95,300 R, O, C 21. New World Courtyard, Shenyang EJV Con 7,847 32,200 C, H Dalian 22. Dalian New World Plaza EJV Con 9, ,767 R, O, C 23. Dalian Bonde Tak International Finance Centre WFE Con 16, ,690 R, C CENTRAL REGION Shanghai 24. Regent Place EJV Con 5,496 27,732 R, C, Oth 25. Shanghai Zhongshan Square CJV Con 33, ,455 R, O, Oth 26. Shanghai Sunrise Garden EJV Con 161,595 92,950 R 27. Hong Kong New World Tower CJV Con 9, ,047 R, O, H, C, Oth 28. Changning Ramada Square CJV Con 9,084 88,813 R, H, C, Oth 29. Zhongshannanyi Road Development EJV Mass-C 32, ,816 R, C 30. Mengzi Road Development WFE Mass-C 24,684 92,565 R Huaihaizhong Road WFE Con O 115

118 New World China Land Limited PROJECT FORM OF TYPE OF SITE AREA TOTAL GFA NO. PROJECT NAME INVESTMENT DEVELOPMENT (sq. m.) (sq. m.) USAGE CENTRAL REGION (Cont d) Wuhan 32. Wuhan Tazi Lake Residential Development CJV Con 828, ,448 R, Oth 33. Wuhan International Trade and Commerce Centre Main EJV Con 6,947 20,438 C Annex EJV Con 3,806 19,461 O, C, Oth 34. Golden World Tower EJV Con 3,670 43,618 R, C 35. Wuhan Hotel Redevelopment CJV Con 9,639 65,000 R, H, C 36. Wuhan Changqing Garden CJV Mass-L 2,311,331 3,360,785 R, Oth 37. New World Courtyard, Wuhan CJV Con 5,201 10,250 H 38. Wuhan Xinhuaxia Road Development CJV Mass-L 96, ,000 R, C Nanjing 39. Nanjing New World Centre EJV Con 11, ,094 R, C, H Hefei 40. Hefei New World Garden CJV Mass-C 82, ,468 R, C, Oth SOUTHERN REGION Guangzhou 41. New World Riverside Villa Zone 14 CJV Con 51,712 3,943 R 42. New World Casa California Zone 13 CJV Con 18,930 22,803 R, Oth 43. New World Eastern Garden CJV Mass-C 61, ,126 R, C, Oth 44. Tianhe Shipai Lot Nos. 2 & 5 Development CJV Mass-C 96, ,047 R, O, C 45. Pearl River New Town Zone L CJV Mass-C 98, ,075 R, C, Oth 46. Fangcun District Nos. 1, 2 & 4 Development CJV Mass-C 362,701 1,118,761 R, Oth 47. Fortuna Garden CJV Con N/A 181 R 48. Jixian Zhuang Commodity Housing Development CJV Mass-C 409, ,992 R, C 49. Guangzhou Gloria City CJV Con 21, ,596 R, O, C, Oth 50. Fangcao Garden CJV Mass-C 44, ,057 R, C, Oth 51. Jixian Zhuang Low-cost Housing Development CJV Mass-L 526, ,900 R, Oth Pearl River Delta 52. Foshan Golf & Country Club CJV Con 17,967 6,665 R Con 3,000,899 N/A G 53. Shenzhen Xilihu Development CJV Con 58,121 29,000 R, Oth 54. Shenzhen Shatoujiao Development CJV Mass-C 89, ,100 R, C, Oth 55. Shunde New World Convention & Exhibition Centre CJV Con 14, ,224 R, C, O 56. New World Courtyard, Shunde CJV Con 5,000 36,524 H 57. Shunde Rongqi Riverside Road Development EJV Mass-C 185, ,484 R, O, C, H 58. Shunde Tai Fook Garden Note (4) Con 10,000 to be determined R 59. Dongguan New World Garden CJV Mass-C 504, ,794 R 60. Huiyang Palm Island Golf Club & Resort EJV Con 255, ,860 R Con 1,115,000 N/A G 61. Huizhou Changhuyuan Development CJV Mass-L 57, ,254 R, C, Oth 62. Xintang New World Garden CJV Mass-L 199, ,407 R, C, Oth 63. Qingyuan Low-cost Housing Development CJV Mass-L 538, ,000 R 64. Zhuhai New World Harbour-front Garden CJV Mass-C 41,004 62,061 R, Oth 65. Zhaoqing Lake Development CJV Con 160, ,006 R 66. Haikou Low-cost Housing Development CJV Mass-L 115, ,252 R 116

119 Project Profile Annual Report 1999 Notes: 1. CJV denotes co-operative joint venture, EJV denotes equity joint venture and WFE denotes wholly foreign-owned enterprise. An EJV is a legal entity with limited liability. The Chinese partner and the foreign partner will share profits and risks in proportion to their respective contributions to the registered capital of the EJV. A CJV may either be incorporated as a legal entity or may be unincorporated. The liabilities and rights to share profits of parties to a CJV need not be fixed in proportion to their respective contributions to the capital of the CJV and the parties may agree otherwise in the co-operative joint venture contracts. A WFE is a Chinese company wholly-owned by foreign investors. The liabilities of foreign investors of a WFE are limited to the amount of their contributions to the registered capital of the WFE. 2. Con denotes Conventional Property Projects; Mass-L denotes Low-cost Community Housing Projects; Mass-C denotes Community Housing Projects. 3. Usage R: Residential O: Office C: Commercial H: Hotel G: Golf Course W: Warehouse Oth: Others 4. In respect of such projects, the Group has entered into a joint venture contract with the relevant joint venture partner but such contract has not yet been validated through approval by the appropriate authorities and a joint venture company for the purpose of developing this project has not been formed. PROPERTY RELATED PROJECTS PROJECT NAME FORM OF INVESTMENT SITE AREA (sq. m.) City Core Redevelopment Projects Tianjin City Core Redevelopment Project CJV 2,520,991 Beijing Chongwen District City Core Redevelopment Project Lots 5 & 6 CJV 223,952 Land Improvement Projects Wujiashan Economic Development Area Land Improvement Project CJV 6,502,

120 New World China Land Limited 1. Beijing New World Centre Phase I NWCL s Attributable Interest Beijing Chongwen New World Properties Development Co., Ltd.: 58%; China New World Electronics Ltd.: 70% Form of Investment CJV Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Status Completed Site Area 17,141 sq. m. Development Information Residential 8,530 sq.m. Office South Tower 7,310 sq.m. Office North Tower 21,299 sq.m. Commercial 74,232 sq.m. Ancillary Facilities 9,252 sq.m. Total 120,623 sq.m. 2. Beijing New World Centre Phase II NWCL s Attributable Interest 60% Form of Investment CJV Beijing Chong Yu Real Estate Development Co., Ltd. Status Internal renovation Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 16,224 sq. m. Development Information Service Apartment 82,211 sq.m. Commercial/Recreational 38,730 sq.m. Office 8,618 sq.m. Total 129,559 sq.m. Development Status Total: 120,623 sq. m. Completed 120,623 sq.m. Development Status Total: 129,559 sq. m. Under development 129,559 sq.m. 3. Beijing New World Garden NWCL s Attributable Interest 60% Form of Investment CJV Beijing Chong Yu Real Estate Development Co., Ltd. Status Construction in progress Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 52,800 sq. m. Development Information Commercial 37,237 sq. m. Residential 95,489 sq. m. Ancillary and public facilities 63,697 sq. m. Total 196,423 sq. m. 4. Beijing Chongwen District Lot No. 5 Development Phase I NWCL s Attributable Interest 70% Form of Investment CJV Beijing Chongwen New World Properties Development Co., Ltd. Status Construction in progress Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 19,977 sq. m. Development Information Residential 65,271 sq. m. Development Status Total: 196,423 sq. m. Development Status Total: 65,271 sq. m. Under development Planning Under development 95,000 sq. m. 101,423 sq. m. 65,271 sq. m. 118

121 Project Profile Annual Report Chongwen District Development NWCL s Attributable Interest 70% Form of Investment CJV Beijing Chongwen New World Properties Development Co., Ltd. Status Vacant Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 630,972 sq. m. Development Information Residential 1,042,526 sq. m. Commercial 585,171 sq. m. Total 1,627,697 sq. m. 6. Yanjing Building Development NWCL s Attributable Interest 70% Form of Investment CJV Beijing Chongwen New World Properties Development Co. Ltd. Status Vacant Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 6,600 sq. m. Development Information Office 10,880 sq. m. Commercial 21,380 sq. m. Ancillary facilities 4,480 sq. m. Total 36,740 sq. m. Development Status Total: 1,627,697 sq. m. Development Status Total: 36,740 sq. m. Under development Planning Planning 18,286 sq. m. 1,609,411 sq. m. 36,740 sq. m. 7. Daxing Warehouse NWCL s Attributable Interest 70% Form of Investment CJV China New World Electronics Ltd. Status Completed Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 31,707 sq. m. Development Information Warehouse 8,190 sq. m. Office building 1,998 sq. m. Ancillary facilities 318 sq. m. Total 10,506 sq. m. 8. Beijing Lai Loi Garden NWCL s Attributable Interest 24.5% Form of Investment CJV 1) Beijing Po Garden Real Estates Development Co., Ltd. 2) Beijing Chang Le Real Estates Development Co., Ltd. 3) Beijing Niceline Real Estates Development Co., Ltd. 4) Beijing Fu Wah Real Estates Development Co., Ltd. Status Vacant Payback Priority to NWCL No Accounting Classification Associated Company Site Area 1,270,500 sq. m. Development Information Residential 568,488 sq. m. Others 70,017 sq. m. Total 638,505 sq. m. Development Status Total: 10,506 sq. m. Development Status Total: 638,505 sq. m. Completed Under development Planning 10,506 sq. m. 126,000 sq. m. 512,505 sq. m. 119

122 New World China Land Limited 9. Beijing Boxing Plaza NWCL s Attributable Interest N/A Form of Investment In respect of such project, the Group has entered into a joint venture contract with the relevant joint venture partner but such contract has not yet been validated by approval of the appropriate authorities and a joint venture company for the purpose of developing this project has not been formed. Status Under construction Payback Priority to NWCL Yes Accounting Classification Deposit for proposed joint venture Site Area 11,520 sq. m. Development Information Office 28,150 sq. m. Commercial 17,900 sq. m. Plant rooms 3,250 sq. m. Total 49,300 sq. m. 10. New World Courtyard, Beijing NWCL s Attributable Interest 59% Form of Investment CJV Beijing Xin Lian Hotel Co., Ltd. Status In operation Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area N/A (included in Beijing New World Centre Phase I) Development Information Grade 4-star Guest Room 293 Restaurant 2 Total GFA 23,988 sq. m. Development Status Total: 49,300 sq. m. Planning 49,300 sq. m. Development Status Total: 23,988 sq. m. Completed 23,988 sq. m. 11. Yizhuang Development NWCL s Attributable Interest 70% Form of Investment CJV Beijing Xin Kang Real Estate Development Company Limited Status Under construction Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 101,894 sq. m. Development Information Residential 157,850 sq. m. Commercial 8,969 sq. m. Amenities 12,556 sq. m. Total 179,375 sq. m. 12. Tianjin New World Anderson Centre NWCL s Attributable Interest 51% Form of Investment WFE New World Anderson (Tianjin) Development Co., Ltd. Status Completed Payback Priority to NWCL Yes Accounting Classification Subsidiary Site Area 23,127 sq. m. Development Information Commercial 68,761 sq. m. Office 12,240 sq. m. Ancillary facilities 10,000 sq. m. Total 91,001 sq. m. Development Status Total: 179,375 sq. m. Under development Development Status Total: 91,001 sq. m. Completed 179,375 sq. m. 91,001 sq. m. 120

123 Project Profile Annual Report Tianjin Xin An Garden 14. Tianjin Dahutung Development NWCL s Attributable Interest 51% Form of Investment WFE New World Anderson (Tianjin) Development Co., Ltd. Status Phase I under construction Payback Priority to NWCL Yes Accounting Classification Subsidiary Site Area 20,148 sq. m. Development Information Residential 60,016 sq. m. Commercial 4,878 sq. m. Office 30,000 sq. m. Ancillary facilities 5,824 sq. m. Total 100,718 sq. m. NWCL s Attributable Interest 70% Form of Investment CJV Tianjin New World Properties Development Co., Ltd. Status Under development Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 25,575 sq. m. Development Information Residential 28,000 sq. m. Office 204,530 sq. m. Commercial 29,970 sq. m. Total 262,500 sq. m. Development Status Total: 100,718 sq. m. Development Status Total: 262,500 sq. m. Under development Under development Planning 100,718 sq. m. 12,000 sq. m. 250,500 sq. m. 15. Huayuan Residential Area Development Sub-area 4 and 8 NWCL s Attributable Interest The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. Form of Investment CJV Tianjin New World Housing Development Co., Ltd. Status Sub-area 8 completed Sub-area 4 under construction Payback Priority to NWCL Yes Accounting Classification Fixed Return Joint Venture Site Area Sub-area 4 101,320 sq. m. Sub-area 8 200,541 sq. m. Development Information Sub-area 4 GFA 124,900 sq. m. Sub-area 8 GFA 105,288 sq. m. 16. Xin Chun Hua Yuan Development Lot 603 & Bajiefang NWCL s Attributable Interest The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. Form of Investment CJV Tianjin New World Housing Development Co., Ltd. Status Construction work for residential portion of Phase I completed Pre-construction work of Phase II in progress Payback Priority to NWCL Yes Accounting Classification Fixed Return Joint Venture Site Area 72,800 sq. m. Development Information Phase I: Residential 18,993 sq. m. Commercial 18,247 sq. m. Sub-total 37,240 sq. m. Phase II: Low-rise residential 53,004 sq. m. High-rise residential 8,199 sq. m. Apartment 40,204 sq. m. Reprovisional houses 23,190 sq. m. Commercial 6,050 sq. m. Sub-total 130,647 sq. m. Total 167,887 sq. m. Development Status Total: 230,188 sq. m. Development Status Total: 167,887 sq. m. Completed Under development Planning Completed Under development Planning 5,250 sq. m. 137,852 sq. m. 87,086 sq. m. 12,555 sq. m. 54,000 sq. m. 101,332 sq. m. 121

124 New World China Land Limited 17. Nanshi Development NWCL s Attributable Interest Tianjin New World Properties Development Co., Ltd. : 70%; Tianjin New World Housing Development Co., Ltd.: The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. Form of Investment CJV Tianjin New World Properties Development Co., Ltd. Tianjin New World Housing Development Co., Ltd. Status Demolition and resettlement work in progress Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity/ Fixed Return Joint Venture Site Area Tianjin New World Properties Development Co., Ltd. 347,498 sq. m. Tianjin New World Housing Development Co., Ltd. 72,711 sq. m. Development Information Residential 1,087,692 sq. m. Commercial 409,354 sq. m. Others 52,796 sq. m. Total 1,549,842 sq. m. Development Status Total: 1,549,842 sq. m. 18. Shijiazhuang New World Plaza NWCL Attributable Interest 55% Form of Investment EJV Shijiazhuang New World Industry Co., Ltd. Status Completed Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 90,602 sq. m. Development Information Commercial 38,054 sq. m. Hotel 6,750 sq. m. Others 44,811 sq. m. Total 89,615 sq. m. Development Status Total: 89,615 sq. m. Under development Planning Completed 35,000 sq. m. 1,514,842 sq. m. 89,615 sq. m. 19. Shenyang New World Garden 20. Taiyuan Street Development NWCL s Attributable Interest 90% Form of Investment Status Payback Priority to NWCL Accounting Classification CJV New World (Shenyang) Property Development Limited New World (Shenyang) Property Development No. 2 Limited New World (Shenyang) Property Development No. 3 Limited New World (Shenyang) Property Development No. 4 Limited New World (Shenyang) Property Development No. 5 Limited New World (Shenyang) Property Development No. 6 Limited Under construction Yes Subsidiary Site Area 1,959,300 sq. m. Development Information Low-rise residential 1,747,670 sq. m. High-rise residential 444,180 sq. m. Townhouses 38,120 sq. m. Commercial 122,080 sq. m. Market 7,140 sq. m. Ancillary facilities 377,150 sq. m. Clubhouse 6,000 sq. m. Carparking 456,280 sq. m. Non-salable ancillary facilities 119,560 sq. m. Total 3,318,180 sq. m. NWCL Attributable Interest N/A Form of Investment In respect of such project, the Group has entered into a joint venture contract with the relevant joint venture partner but such contract has not yet been validated by approval of the appropriate authorities and a joint venture company for the purpose of developing this project has not been formed. Status Planning Payback Priority to NWCL No Accounting Classification Deposit for proposed joint venture Site Area 7,293 sq. m. Development Information Residential 22,800 sq. m. Office 37,700 sq. m. Commercial 34,800 sq. m. Total 95,300 sq. m. Development Status Total: 3,318,180 sq. m. Development Status Total: 95,300 sq. m. Under development Planning Planning ,600 sq. m. 3,057,580 sq. m. 95,300 sq. m.

125 Project Profile Annual Report New World Courtyard, Shenyang NWCL Attributable Interest 70% Form of Investment EJV Shenyang New World Lumingchun Building Co., Ltd. Status In operation Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 7,847 sq. m. Development Information Grade 4-star Guest room 263 Total GFA 32,200 sq. m. 22. Dalian New World Plaza NWCL Attributable Interest 88% Form of Investment EJV Dalian New World Plaza International Co., Ltd. Status Under construction Payback Priority to NWCL Yes Accounting Classification Subsidiary Site Area 9,800 sq.m. Development Information Office/service apartment 83,982 sq. m. Retail 53,785 sq. m. Total 137,767 sq. m. Development Status Total: 32,200 sq. m. Development Status Total: 137,767 sq. m. Completed Under development Planning 32,200 sq. m. 35,228 sq. m. 102,539 sq. m. 23. Dalian Bonde Tak International Finance Centre NWCL Attributable Interest 30% Form of Investment WFE Dalian Bonde Tak International Finance Centre Co., Ltd. Status Under construction Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 16,600 sq.m. Development Information Residential 22,440 sq. m. Commercial 196,250 sq. m. Total 218,690 sq. m. 24. Regent Place NWCL Attributable Interest 30% Form of Investment EJV Shanghai Jianmei Property Development Co., Ltd. Status Completed Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 5,496 sq. m. Development Information Residential 22,996 sq. m. Commercial 4,030 sq. m. Ancillary facilities 706 sq. m. Total 27,732 sq. m. Development Status Total: 218,690 sq. m. Planning 218,690 sq. m. Development Status Total: 27,732 sq. m. Completed 27,732 sq. m. 123

126 New World China Land Limited 25. Shanghai Zhongshan Square NWCL s Attributable Interest 34.2% Form of Investment CJV Shanghai Trio Property Development Co., Ltd. Status Phase I Completed Phase II To be developed Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area Phase I 17,201 sq. m. Phase II 16,171 sq. m. Development Information Phase I: Residential 76,498 sq. m. Phase II: Office 127,957 sq. m. 26. Shanghai Sunrise Garden NWCL s Attributable Interest 64% Form of Investment EJV Shanghai Heyu Properties Co., Ltd. Status Phase I Completed Phase II Under construction Payback Priority to NWCL Yes Accounting Classification Subsidiary Site Area Phase I 43,879 sq. m. Phase II 117,716 sq. m. Development Information Phase I residential 25,841 sq. m. Phase II residential 67,109 sq. m. Development Status Total: 204,455 sq. m. Development Status Total: 92,950 sq. m. Completed Planning Completed Planning 76,498 sq. m. 127,957 sq. m. 25,841 sq. m. 67,109 sq. m. 27. Hong Kong New World Tower NWCL s Attributable Interest 44.1% Form of Investment CJV Shanghai New World Huai Hai Property Development Co., Ltd. Status Under construction Payback Priority to NWCL Yes Accounting Classification Associated Company Site Area 9,953 sq. m. Development Information Service apartment 17,953 sq. m. Commercial 22,599 sq. m. Hotel 45,324 sq. m. Office 13,085 sq. m. Ancillary facilities 15,086 sq. m. Total 114,047 sq. m. 28. Changning Ramada Square NWCL s Attributable Interest 57% Form of Investment CJV Shanghai Ramada Plaza Ltd. Status Under construction Payback Priority to NWCL Yes Accounting Classification Subsidiary Site Area Plot A 4,820 sq. m. Plot B 4,264 sq. m. Development Information Residential 33,987 sq. m. Commercial 17,272 sq. m. Hotel 33,177 sq. m. Ancillary facilities 4,377 sq. m. Total 88,813 sq. m. Development Status Total: 114,047 sq. m. Under development 114,047 sq. m. Development Status Total: 88,813 sq. m. Under development 88,813 sq. m. 124

127 Project Profile Annual Report Zhongshannanyi Road Development NWCL s Attributable Interest 80% Form of Investment EJV Shanghai Ju Yi Real Estate Development Co., Ltd. Status Under construction Payback Priority to NWCL No Accounting Classification Subsidiary Site Area 32,795 sq. m. Development Information Phase I: Residential (domestic) 21,013 sq. m. Commercial/residential (overseas) 21,134 sq. m. Retail (overseas) 4,766 sq. m. Phase II: Residential (domestic) 74,003 sq. m. Phase III: Commercial/residential (overseas) 49,900 sq. m. Retail (overseas) 24,000 sq. m. Total 194,816 sq. m. 30. Mengzi Road Development NWCL s Attributable Interest 80% Form of Investment WFE Fung Seng Real Estate Development (Shanghai) Co., Ltd. Status Vacant Payback Priority to NWCL No Accounting Classification Subsidiary Site Area 24,684 sq. m. Development Information Residential 92,565 sq. m. Development Status Total: 194,816 sq. m. Development Status Total: 92,565 sq. m. Under development Planning Planning 42,147 sq. m. 152,669 sq. m. 92,565 sq. m Huaihaizhong Road NWCL s Attributable Interest 80% Form of Investment WFE Fung Seng Real Estate Development (Shanghai) Co., Ltd. Status Completed Payback Priority to NWCL No Accounting Classification Subsidiary Site Area 343 sq. m. Development Information Office 794 sq. m. 32. Wuhan Tazi Lake Residential Development NWCL s Attributable Interest 50% Form of Investment CJV Wuhan Xinhan Development Co., Ltd. Status To be developed Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 828,233 sq. m. Development Information Residential 308,648 sq. m. Other 7,800 sq. m. Total 316,448 sq. m. Development Status Total: 794 sq. m. Completed 794 sq. m. Development Status Total: 316,448 sq. m. Planning 316,448 sq. m. 125

128 New World China Land Limited 33. Wuhan International Trade and Commerce Centre Main & Annex NWCL s Attributable Interest 95% Form of Investment EJV Wuhan New Eagle Development Company Limited Status Main Renovation in progress Annex Completed Payback Priority to NWCL No Accounting Classification Subsidiary Site Area Main 6,947 sq. m. Annex 3,806 sq. m. Development Information Main: Retail 20,438 sq. m. Annex: E/M 384 sq. m. Office 9,423 sq. m. Retail 9,654 sq. m. Sub-total 19,461 sq. m. Total 39,899 sq. m. 34. Golden World Tower NWCL s Attributable Interest 15% Form of Investment EJV Wuhan Golden World Real-Estate Development Co. Limited Status Completed Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 3,670 sq. m. Development Information Commercial (retail podium) 10,327 sq. m. Commercial/residential 33,291 sq. m. Total 43,618 sq. m. Development Status Total: 39,899 sq. m. Development Status Total: 43,618 sq. m. Completed Under development Completed 19,461 sq. m. 20,438 sq. m. 43,618 sq. m. 35. Wuhan Hotel Redevelopment NWCL s Attributable Interest 60% Form of Investment CJV Wuhan Wuxin Hotel Co., Ltd. Status Evacuated structure with ancillary buildings Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 9,639 sq. m. Development Information Office/service apartment 17,000 sq. m. Retail 30,000 sq. m. Hotel 18,000 sq. m. Total 65,000 sq. m. 36. Wuhan Changqing Garden NWCL s Attributable Interest The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. Form of Investment CJV Wuhan New World Housing Development Limited Status Under construction Payback Priority to NWCL Yes Accounting Classification Fixed Return Joint Venture Site Area 2,311,331 sq. m. Development Information Residential 3,332,565 sq. m. Other 28,220 sq. m. Total 3,360,785 sq. m. Development Status Total: 65,000 sq. m. Planning 65,000 sq. m. Development Status Total: 3,360,785 sq. m. Completed Under development Planning 58,039 sq. m. 964,477 sq. m. 2,338,269 sq. m. 126

129 Project Profile Annual Report New World Courtyard, Wuhan NWCL s Attributable Interest 50% Form of Investment CJV Wuhan Taibei and New World Hotel Co., Ltd. Status Completed and operating Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 5,201 sq. m. Development Information Grade 3 star Guest room 138 Restaurants 3 Total 10,250 sq. m. 38. Wuhan Xinhuaxia Road Development NWCL s Attributable Interest The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. Form of Investment CJV Wuhan New World Housing Development Limited Status Under construction Payback Priority to NWCL Yes Accounting Classification Fixed Return Joint Venture Site Area 96,493 sq. m. Development Information Residential 202,500 sq. m. Commercial 65,500 sq. m. Total 268,000 sq. m. Development Status Total: 10,250 sq. m. Completed 10,250 sq. m. Development Status Total: 268,000 sq. m. Planning 268,000 sq. m. 39. Nanjing New World Centre NWCL Attributable Interest 48% Form of Investment EJV Nanjing Huawei Real Estate Development Co., Ltd. Status Under construction Payback Priority to NWCL No Accounting Classification Subsidiary Site Area 11,219 sq. m. Development Information Service apartment 120,095 sq. m. Retail 42,703 sq. m. Hotel 35,296 sq. m. Total 198,094 sq. m. 40. Hefei New World Garden NWCL Attributable Interest 60% Form of Investment CJV Hefei New World Housing Development Limited Status Under construction Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 82,660 sq. m. Development Information Residential 100,453 sq. m. Commercial 4,800 sq. m. Others 3,215 sq. m. Total 108,468 sq. m. Development Status Total: 198,094 sq. m. Under development 198,094 sq. m. Development Status Total: 108,468 sq. m. Under development 108,468 sq. m. 127

130 New World China Land Limited 41. New World Riverside Villa Zone 14 NWCL Attributable Interest 60% Form of Investment CJV Guangzhou Fucheng Property Development Co., Ltd. Status Completed Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 51,712 sq. m. Development Information Residential 3,943 sq. m. 42. New World Casa California Zone 13 NWCL Attributable Interest 60% Form of Investment CJV Guangzhou Fucheng Property Development Co., Ltd. Status Under construction Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 18,930 sq. m. Development Information Residential 19,846 sq. m. Ancillary facilities 2,957 sq. m. Total 22,803 sq. m. Development Status Total: 3,943 sq. m. Development Status Total: 22,803 sq. m. Completed Under development Planning 3,943 sq. m. 20,544 sq. m. 2,259 sq. m. 43. New World Eastern Garden NWCL Attributable Interest 45% Form of Investment CJV Guangzhou Xin Hua Chen Real Estate Co., Ltd. Status Under construction Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 61,784 sq. m. Development Information Residential 168,350 sq. m. Commercial 29,136 sq. m. Ancillary 11,640 sq. m. Total 209,126 sq. m. 44. Tianhe Shipai Lot Nos. 2 & 5 Development NWCL Attributable Interest 90% Form of Investment CJV Guangzhou Xin Hua Jian Real Estate Co., Ltd. Status Vacant Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 96,378 sq. m. Development Information Highrise Residential 206,817 sq. m. Office 90,000 sq. m. Commercial 28,230 sq. m. Total 325,047 sq. m. Development Status Total: 209,126 sq. m. Development Status Total: 325,047 sq. m. Completed Under development Planning Under development Planning 789 sq. m. 95,216 sq. m. 113,121 sq. m. 64,758 sq. m. 260,289 sq. m. 128

131 Project Profile Annual Report Pearl River New Town Zone L NWCL s Attributable Interest 90.5% Form of Investment CJV Guangzhou Xin Yi Development Limited Status Vacant Payback Priority to NWCL No Accounting Classification Subsidiary Site Area 98,141 sq.m. Development Information Residential 274,486 sq. m. Commercial 6,900 sq. m. Ancillary facilities 3,689 sq. m. Total 285,075 sq. m. 46. Fangcun District Nos. 1, 2 and 4 Development NWCL s Attributable Interest 60% Form of Investment CJV Guangzhou Fong Chuen New World Property Development Limited Status Site clearance completed Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 362,701 sq. m. Development Information Residential 1,056,973 sq. m. Ancillary facilities 61,788 sq. m. Total 1,118,761 sq. m. Development Status Total: 285,075 sq. m. Planning 285,075 sq. m. Development Status Total: 1,118,761 sq. m. Planning 1,118,761 sq. m. 47. Fortuna Garden NWCL s Attributable Interest 60% Form of Investment CJV Guangzhou Cosmart Estate Development Limited Status Completed Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area N/A Development Information Residential 181 sq. m. 48. Jixian Zhuang Commodity Housing Development NWCL s Attributable Interest 80% Form of Investment CJV Guangzhou Xinsui Tourism Centre Limited Status Under construction Payback Priority to NWCL Yes Accounting Classification Subsidiary Site Area 409,801 sq. m. Development Information Residential 795,784 sq. m. Commercial 92,208 sq. m. Total 887,992 sq. m. Development Status Total: 181 sq. m. Completed 181 sq. m. Development Status Total: 887,992 sq. m. Planning 887,992 sq. m. 129

132 New World China Land Limited 49. Guangzhou Gloria City NWCL s Attributable Interest 40.5% Form of Investment CJV Gloria City Development Company Ltd. Status Planning Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 21,484 sq. m. Development Information Residential 185,836 sq. m. Office 4,525 sq. m. Commercial 30,195 sq. m. Others 4,040 sq. m. Total 224,596 sq. m. 50. Fangcao Garden NWCL s Attributable Interest 20% Form of Investment CJV Guangzhou Sifang Concord Real Estate Company Limited Status Under development Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 44,516 sq. m. Development Information Residential 188,516 sq. m. Commercial 7,471 sq. m. Others 7,070 sq. m. Total 203,057 sq. m. Development Status Total: 224,596 sq. m. Development Status Total: 203,057 sq. m. Planning Under development Planning 224,596 sq. m. 120,000 sq. m. 83,057 sq. m. 51. Jixian Zhuang Low-cost Housing Development NWCL s Attributable Interest The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. Form of Investment CJV Guangzhou Jixian Zhuang New World City Garden Development Limited Status Under construction Payback Priority to NWCL Yes Accounting Classification Fixed Return Joint Venture Site Area 526,485 sq. m. Development Information Low-cost residential 610,420 sq. m. Commodity House 110,010 sq. m. Ancillary facilities 79,470 sq. m. Total 799,900 sq. m. 52. Foshan Golf & Country Club NWCL s Attributable Interest Residential 24.75% Golf Course 23.37% Form of Investment CJV Foshan Country Club Co., Ltd. Foshan Country Club Real Estate Development Limited Status Residential Under construction Golf Course Completed Payback Priority to NWCL No Accounting Classification Associated Company Site Area Residential 17,967 sq. m. Golf Course 3,000,899 sq. m. Development Information Residential: Villas Type I 4,830 sq. m. Villas Type II 1,835 sq. m. Total 6,665 sq. m. Development Status Total: 799,900 sq. m. Development Status Total: 6,665 sq. m. Under development Planning Planning 304,000 sq. m. 495,900 sq. m. 6,665 sq. m. 130

133 Project Profile Annual Report Shenzhen Xilihu Development NWCL s Attributable Interest 70% Form of Investment CJV Shenzhen Top One Real Estate Development Co., Ltd. Status Under development Payback Priority to NWCL No Accounting Classification Subsidiary Site Area 58,121 sq. m. Development Information Villas 16,300 sq. m. Low-rise residential 7,500 sq. m. Ancillary facilities 5,200 sq. m. Total 29,000 sq. m. 54. Shenzhen Shatoujiao Development NWCL s Attributable Interest 70% Form of Investment CJV Shenzhen Topping Real Estate Development Co., Ltd. Status Under development Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 89,350 sq. m. Development Information Villas 7,500 sq. m. Duplex 15,300 sq. m. Highrise Residential 121,403 sq. m. Commercial 2,000 sq. m. Ancillary facilities 3,897 sq. m. Total 150,100 sq. m. Development Status Total: 29,000 sq. m. Development Status Total: 150,100 sq. m. Under development Under development Planning 29,000 sq. m. 49,173 sq. m. 100,927 sq. m. 55. Shunde New World Convention & Exhibition Centre NWCL s Attributable Interest 35% Form of Investment CJV Shunde Shunxing Real Estate Co., Ltd. Status Phase I Completed Phase II Under construction Payback Priority to NWCL No Accounting Classification Associated Company Site Area 14,171 sq. m. Development Information Phase I: Residential 15,428 sq. m. Commercial 33,254 sq. m. Sub-total 48,682 sq. m. Phase II: Residential 64,018 sq. m. Office 32,524 sq. m. Sub-total 96,542 sq. m. Total 145,224 sq. m. 56. New World Courtyard, Shunde NWCL s Attributable Interest 32.5% Form of Investment CJV Shunde NW Ramada Hotel Limited Status In operation Payback Priority to NWCL No Accounting Classification Associated Company Site Area 5,000 sq. m. Development Information Grade 4-star Guest rooms 450 Total GFA 36,524 sq. m. Development Status Total: 145,224 sq. m. Development Status Total: 36,524 sq. m. Completed Planning Completed 48,682 sq. m. 96,542 sq. m. 36,524 sq. m. 131

134 New World China Land Limited 57. Shunde Rongqi Riverside Road Development 58. Shunde Tai Fook Garden NWCL s Attributable Interest 33% Form of Investment EJV Shunde Xinshungi Real Estate Co., Ltd. Status Planning Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 185,000 sq. m. Development Information Residential 551,184 sq. m. Office 25,900 sq. m. Commercial 117,500 sq. m. Hotel 25,900 sq. m. Total 720,484 sq. m. Development Status Total: 720,484 sq. m. NWCL s Attributable Interest Form of Investment Status Payback Priority to NWCL Accounting Classification Site Area Development Information N/A In respect of such project, the Group has entered into a joint venture contract with the relevant joint venture partner but such contract has not yet been validated by approval of the appropriate authorities and a joint venture company for the purpose of developing this project has not been formed. Planning No Associated Company 10,000 sq.m. To be determined Planning 720,484 sq. m. 59. Dongguan New World Garden 60. Huiyang Palm Island Golf Club & Resort NWCL s Attributable Interest 38% Form of Investment CJV Dongguan New World Garden Trade Construction Co., Ltd. Status Completed and partially under construction Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 504,563 sq. m. Development Information Phase I-V 25,125 sq. m. Remaining phases 927,669 sq. m. Total 952,794 sq. m. NWCL s Attributable Interest 26% Form of Investment EJV Residential: Golf Course: Fortune Leader Overseas Chinese (Dayawan) Development Limited Fortune Leader Overseas Chinese (Dayawan) Investment Co., Ltd. Status Residential To be developed Golf Course Partially completed Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area Residential 255,000 sq. m. Golf Course 1,115,000 sq. m. Development Information Residential 225,860 sq. m. Development Status Total: 952,794 sq. m. Completed Under development Planning Development Status Total: 225,860 sq. m. Planning 26,372 sq. m. 89,125 sq. m. 837,297 sq. m. 225,860 sq. m. 132

135 Project Profile Annual Report Huizhou Changhuyuan Development NWCL s Attributable Interest The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. Form of Investment CJV Huizhou New World Housing Development Limited Status Completed and partially under construction Payback Priority to NWCL Yes Accounting Classification Fixed Return Joint Venture Site Area 57,653 sq. m. Development Information Commercial complex 16,569 sq. m. Residential 103,396 sq. m. Ancillary facilities 6,289 sq. m. Total 126,254 sq. m. Development Status Total: 126,254 sq. m. 62. Xintang New World Garden NWCL s Attributable Interest The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. Form of Investment CJV Guangzhou Heng Sheng Properties Development Limited Status Under construction Payback Priority to NWCL Yes Accounting Classification Fixed Return Joint Venture Site Area 199,931 sq. m. Development Information Commodity housing 308,067 sq. m. Commercial 21,997 sq. m. Ancillary facilities 15,343 sq. m. Total 345,407 sq. m. Development Status Total: 345,407 sq. m. Completed Planning Under development Planning 64,004 sq. m. 62,250 sq. m. 105,780 sq. m. 239,627 sq. m. 63. Qingyuan Low-cost Housing Development NWCL s Attributable Interest The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. Form of Investment CJV Qingyuan New World Housing Development Limited Status Vacant site Payback Priority to NWCL Yes Accounting Classification Fixed Return Joint Venture Site Area 538,497 sq. m. Development Information Residential 936,000 sq. m. 64. Zhuhai New World Harbour-front Garden NWCL s Attributable Interest 60% Form of Investment CJV Zhuhai New World Housing Development Limited Status Under construction Payback Priority to NWCL Yes Accounting Classification Jointly Controlled Entity Site Area 41,004 sq. m. Development Information Residential 57,962 sq. m. Others 4,099 sq. m. Total 62,061 sq. m. Development Status Total: 936,000 sq. m. Planning 936,000 sq. m. Development Status Total: 62,061 sq. m. Under construction 62,061 sq. m. 133

136 New World China Land Limited 65. Zhaoqing Lake Development NWCL s Attributable Interest 32% Form of Investment CJV Zhaoqing New World Property Development Limited Status Cultivated land Payback Priority to NWCL No Accounting Classification Jointly Controlled Entity Site Area 160,367 sq. m. Development Information Residential 315,006 sq. m. 66. Haikou Low-cost Housing Development NWCL s Attributable Interest The Group is entitled to a fixed rate return which is predetermined in accordance with the provisions of the joint venture contracts in respect of development of low-cost community housing. Form of Investment CJV Haikou New World Housing Development Limited Status Vacant site Payback Priority to NWCL Yes Accounting Classification Fixed Return Joint Venture Site Area 115,694 sq. m. Development Information Residential 290,252 sq. m. Development Status Total: 315,006 sq. m. Development Status Total: 290,252 sq. m. Under development Under development Planning 315,006 sq. m. 68,940 sq. m. 221,312 sq. m. 134

137 Annual Report 1999 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN that the Annual General Meeting of the shareholders of the Company will be held at Meeting Room 301B, Hong Kong Convention and Exhibition Centre Phase II, 1 Expo Drive, Wanchai, Hong Kong on the 17th day of December 1999 at 10:30 a.m. for the following purposes: 1. To receive and consider the audited proforma combined accounts and the Reports of the Directors and Auditors for the year ended 30 June To elect Directors and to fix their remuneration. 3. To appoint Auditors and to fix their remuneration. 4. As special business, to consider and if thought fit, pass the following resolutions as ordinary resolutions: ORDINARY RESOLUTIONS (1) THAT: (a) subject to paragraph (c) below, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot and issue additional shares in the capital of the Company and to make or grant offers, agreements and options which would or might require the exercise of such powers be and is hereby generally and unconditionally approved; (b) the approval in paragraph (a) above shall authorise the Directors of the Company during the Relevant Period to make or grant offers, agreements and options which would or might require the exercise of such powers after the end of the Relevant Period; (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors of the Company pursuant to the approval in paragraph (a) above, otherwise than pursuant to (i) a Rights Issue (as hereinafter defined) or (ii) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the Articles of Association of the Company; shall not exceed 20 per cent of the aggregate nominal amount of the share capital of the Company in issue as at the date of this resolution and the said approval shall be limited accordingly; and (d) for the purposes of this resolution: Relevant Period means the period from the passing of this resolution until whichever is the earlier of: (i) the conclusion of the next Annual General Meeting of the Company; (ii) the expiration of the period within which the next Annual General Meeting of the Company is required by applicable law or the articles of association of the Company to be held; and 135